Understanding Escrow Pricing: A Guide

For a service that is designed to add transparency, trust and security to transactions, the world of escrow can seem very opaque. There is almost no publicly-available escrow pricing, and pricing for escrow enquiries can vary wildly - sometimes by factors of 2, 3, 4 or more.

The London escrow market consists of a variety of different escrow services. From professional trustees acting as escrow agents, to banks acting as escrow agents, to law firms acting as escrow agents, to technology platforms acting as escrow agents. Theses services all come with different offerings, at different price points, with different caveats and different risk factors.

We are a pure-play escrow agent. We are independently-owned, not affiliated with any bank, trust corporation or law firm, and we have built our service from the ground up with in-house legal, in-house financial services and a proprietary escrow portal. Crucially, we aren't a middle-man. This comes with some huge benefits in terms of speed, transparency, reliability and risk management for those contemplating escrow arrangements.

We've also built our service offering with service in mind. We've taken out all of the things that slow escrow down (eg, the party ringing their lawyer, who rings the escrow agent, who rings the bank to get the answer, or the forms all being submitted to the bank, but the bank's compliance team asking endless back-and-forth compliance questions), and implemented all the things that make our escrow service best-in-class for high-value or complex transactions (same-day account opening, fund custody at the Bank of England, safeguarding of funds for protection of sums greater than the FSCS limit).

Below, we set out some of these differences so that you can be sure that when you are evaluating competitive quotes, you are getting like-for-like. A bit like if you were buying a new front door lock, or a new safe, you may not choose to go for the cheapest one on the shelf, and there's a very good reason for that...

Law firms aren't allowed to perform escrow services (see here for why). While providing an escrow service is not necessarily a regulated activity (see here for why), it does involve the escrow agent opening a bank account and holding funds for a period of time.

This means that the escrow agent should be regulated by the Financial Conduct Authority and, crucially, that they should have the correct permissions.

If the escrow agent is simply acting as a paying agent (receiving funds, and paying them forward on the same day according to a waterfall or payment schedule), then they can operate with the permission "6. Money Remittance":

This is, in our view, however, not the correct permission for carrying out escrow services. It is designed for Western Union/MoneyCorp style businesses who are sending money around the world on the same day. Why do we say this? Because if a firm only carries out money remittance services, then they are also required to register with HMRC for anti-money laundering supervision. For a paying agent service only, you may consider "6. Money Remittance" to be adequate as long as the funds aren't going to be there for more than a day.

If, however, the escrow agent is going to be holding funds for a period of time (eg, anything longer than overnight), or opening a segregated account for your escrow funds, they must also have the permissions "1. Services enabling cash to be placed on a payment account as well as all the operations required for operating a payment account." and "3. Executing payment transactions (no credit line)":

You can check the FCA Register online, and you can also verify our permissions here.

Why does FCA Regulation matter?

This is more than just semantics. When the FCA grants authorisation to a firm, they spend months (sometimes as long as a year) investigating the firm, their processes, policies and procedures, their underlying compliance activities, their senior management and their disaster recovery, contingency and business continuity plans to ensure the highest level of consumer protection.  If your escrow agent isn't regulated for the provision of escrow services, or doesn't carry the right permissions, then the FCA has not scrutinised them through the lens of the service they are now proposing to offer.

The primary purposes of escrow are to add trust, transparency and security to the underlying transaction(s). Escrow is a secondary service - there is always a primary underlying contract or transaction going on - for this reason, it is imperative that escrow does not delay or adversely affect the underlying transaction.

Providing proper escrow services involves opening a bank account, at a regulated bank, to hold the transaction- or matter-specific funds until the release conditions are met. In this day and age, the compliance involved in opening a bank account is considerable - it involved detailed KYB, and KYC checks, source of funds and source of wealth checks.

If your escrow agent is responsible for its own compliance, like we are, then this can happen very quickly.  If, however, the information needs to pass from you <> escrow agent <> underlying bank compliance team, and then the underlying bank's compliance team have further questions, the compliance exercise can legitimately take days or even weeks.

Where the transaction is important, or sensitive, this delay can mean the difference between having the escrow arrangements in place in good time, and having the entire underlying transaction delayed by the escrow process.

Timing is critical in escrow transactions. Whether the escrow is being used for the transfer of completion funds or the holding of post-completion security, the parties will want to be sure that the account is open in time.

Our accounts are generally opened on the same day that we receive the completed compliance information. Our fastest account opening has taken less than 6 business hours from first quote, to meeting, to initial deposit of over £10 million.

We are based in London, which makes us perfect for international completions. Whether of aircraft, ships, businesses or complex multi-jurisdictional arrangements, we are well-placed to support your transaction.

An escrow arrangement is not just a bank account with a three-way contract for how that bank account should be administered.

The purpose of escrow is to hold funds securely, to ensure that they are still there when they are needed, protected from insolvencies (of either party, the escrow agent, and the underlying bank), and available to be paid out when the release conditions are met.

As an FCA-regulated payment institution, our accounts are:

• ring-fenced - this means that the funds are kept separately from our own;
• segregated - this means that the funds are stored in their own account, and not co-mingled with any other funds from any other of our clients. Each matter or escrow we get involved with has its own account, with unique account number and sort code pair (and its own IBAN) so that it is abundantly clear whose funds they are; and
• safeguarded - this means that in the event of our insolvency, or of the underlying bank's insolvency, the funds are not available to our creditors (or theirs).  This safeguarding eliminates the credit risk in the escrow arrangements.

For trust companies, law firm client accounts, and even banks operating as trustees, this last element (the safeguarding) is often not provided. This means that the escrow parties (in particular, the paying party) are taking a credit risk on the underlying financial institutions. In the event of an insolvency, the FSCS scheme may protect up to the limit, but subject to the specific rules of the scheme.

With a safeguarded account, the funds are protected 100%, to any value.

In this way, a proper escrow account is more akin to a safety deposit box than a bank account - the same funds that you put in are there for you when you go to get them back out. No ifs, no buts, and not affected by any supply-side insolvency.

Our escrow quotes all include either us providing the draft escrow agreement, or us adopting one provided by the parties or their lawyers. Unlike some other escrow agents, we operate with in-house legal expertise so don't need to instruct our own lawyers to assist in the drafting.

This is no small thing. With two sets of lawyers already involved for the underlying transaction (plus, often, a third and possibly a fourth representing various lenders), the last thing a complex transaction needs is yet another set of lawyers getting involved to handle the escrow agent's own side of things.

Our escrow precedent has been reviewed and adopted for a huge number of transactions, by some of the City's leading law firms, so is already in a great starting place for use in your transaction.

Every escrow arrangement we handle has both a lead and a supporting account manager. You'll have their mobile number, and you'll always be able to get hold of one of them.

This means that our escrow service is here to support you, even if your completion is delayed until the middle of the night.

We can offer escrow arrangements in GBP, EUR, USD and CHF.

In addition, if the escrow is being funded from overseas, or payments need to be made in non-GBP currencies, we can offer mid-market FX rates with no mark-up, meaning that the parties don't need to engage yet another party to provide FX services in respect of the transaction(s).

By keeping this in-house, and avoiding further intermediaries, we can offer the best prices and the best speed for any associated FX considerations.

With one of escrow's primary purposes being to keep funds secure, it is vital that your escrow agent treats cyber-security seriously.

ISO 27001:2022 is an international information security system standard that covers everything from physical security at our offices, to the cyber-security of our systems, and the training and expertise of our staff in avoiding cyber-security incidents.

As custodians of your escrow funds, we take our responsibilities very seriously in this regard, and our ongoing certification to this exacting standard is evidence of that.

As escrow agents, we are selling trust and expertise. We recognise this and we have taken steps to demonstrate our integrity and our insistence on being good business citizens as well as trustworthy custodians of your funds.

We adhere to rigorous, independently-verified ethical standards, as verified and audited externally by B Lab UK, which aligns us with many of the top law firms and private banks who refer work to us. It also enables us to make a positive impact from the work that we do with our clients, you.

We carry professional indemnity and crime insurance cover specifically for our escrow and managed payment services (and not justgeneric business insurance, or for professional trustee work), underwritten by Travelers, one of the UK's leading business insurance underwriters.  Be sure to ask us for certificates of our current cover when you go to open your account.

Our offices are situated between Vauxhall and Waterloo, in central London. You are very welcome to come and meet with us or, if you'd prefer, we are generally happy to come and meet with you in London or online to discuss your requirements.

Many tech-based escrow platforms will not be willing to offer this level of service.