Principal or Agent? [Residential Management Companies]

Published on 20th December 2013Author: Peter Rogol

I recently issued an apology on behalf of my Institute for its determination that Residential Management Companies must produce Statutory Accounts containing completely pointless information. But perhaps, after all, they don't. The Institute and the Financial Reporting Council issued their edict based on legal counsel's opinion that RMC's "always act as principals (not agents) in their residential management transactions with third party suppliers."

What if the RMC's contacted all their third party suppliers - typically there aren't many - and advised them that the RMC was acting as agent for its leaseholders, and that in future all invoices must be addressed to "[Name of RMC] as agent for its Leaseholders"? Could it be that legal counsel's opinion would need to change?

I'm no lawyer, but my guess is that if all third party suppliers are formally identifying the RMC as an agent, counsel would be hard-pushed to argue to the contrary.

So come on, ICAEW, help us out here. Go back to counsel, and pose the question - if third party suppliers invoice "[Name of RMC] acting as agent for its Leaseholders", does FRED 50 go west?

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