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Letting and property management agents in the private rented sector who hold client money are now required by law to belong to a government-approved CMP scheme by 1 April 2019.
Presently the government has approved the following client money protection (CMP) schemes for letting and property management agents in the private rented sector:
? Client Money Protect
? Money Shield
? NALS Client Money Protection
? Propertymark
? RICS
? UKALA Client Money Protection
Agents must:
✔️hold client money in a client money account with a bank or building society authorised by the Financial Conduct Authority
✔️or be making all reasonable efforts to open such an account. NB: CMP schemes are permitted to offer a grace period to allow agents to open such accounts, until 1 April 2020
✔️hold and maintain appropriate professional indemnity insurance
have appropriate client money protection handling procedures
✔️obtain a certificate confirming membership of an approved CMP scheme and display this prominently in each of their offices where they deal with the public and on their website
✔️provide a copy of the certificate to any person who may reasonably require it, free of charge
*CMP schemes may set additional requirements on membership*
This is separate from existing requirements to protect tenancy deposits.
Tenants and Landlords
The requirement for agents in the private rented sector who hold client money to join an approved CMP scheme will stop tenants and landlords being left out of pocket where an agent unexpectedly goes bust or absconds with their money.
Tenants and landlords should check whether their agent is a member of an approved CMP scheme, and can do this by:
?checking with the agent directly – a certificate from an approved CMP scheme should be displayed at the agent’s offices and on its website. A tenant or landlord can also ask the agent to provide a copy of their certificate of membership.
?contacting the approved CMP schemes to check and confirm that an agent is a member.
Breaches of the scheme
If an agent is in breach of the requirement to hold CMP membership or transparency requirements to display a certificate of membership, then tenants and landlords should report that agent to their local authority.
If an agent fails to comply with the legal requirement to become a member of an approved CMP scheme, they will be liable for a penalty of up to £30,000. An agent will also be liable for a penalty of up to £5,000 for failing to comply with the legal requirement to display their certificate of membership from an approved CMP scheme.
Source: https://www.gov.uk/government/publications/client-money-protection-for-letting-and-managing-agents/client-money-protection-for-letting-and-managing-agents
