Property managing agents (PMAs) will be exempt from the FSA's client money rules.

In new FSA guidance obtained by Insurance Times, the regulator states that if PMAs comply with section 42 of the Landlord and Tenant Act, complying with the FSA's client money rules would result in a "duplication of process".

Section 42 requires all service charge money to be kept in a trust account.

At the end of July the FSA will consult on the proposal that if firms comply with the Landlord and Tenant Act they will be deemed to comply with the FSA's client money rules.

A source said the decision was taken as most PMAs collect insurance money from property owners as part of a service charge.

The FSA's rule would have resulted in PMAs having to separate insurance money out. This requirement would have become more onerous under new legislation due to be introduced in 2006. Those regulations will require PMAs to have a separate trust account for each client.

Stuart Reid, managing director of Stuart Alexander, which launched a network for PMAs in April, said he was "delighted" with the development which will reduce administration for the network.