All lettings agents will soon be required by law to sign up to an approved Client Money Protection (CMP) scheme or face a fine of up £30,000, it has been announced.
This is the government’s response to its recent consultation on CMP which has run for three months and received 117 responses.
The government will now move to make CMP scheme membership mandatory for letting agents, with plans to set up a government-approved but ‘market led’ approach to provision, similar to the existing redress and deposit protection schemes.
Many of the consultation’s respondents agreed that these schemes should be approved and offer minimum standards of service including having a stringent claims process in place.
The respondents included ARLA, which argued in its consultation submission that a single scheme operated by government would “stifle competition in the market and may ultimately lead to agents paying a much higher CMP levy than they currently are without offering any greater protection for consumers”.
ARLA also highlighted the case of Devon letting agent Janine Pickett, who in 2014 was found to have paid for Mediterranean cruises and a £7,000 Welsh pony out of client funds, cash that – because her franchisor was a Propertymark member – was able to be partly recouped through its CMP scheme.
Some 60% of letting agents have already signed up voluntarily to the existing CMP providers already up and running including The Property Ombudsman, Client Money Protect and Propertymark.
Two new regulations will now be laid down by the government “as parliamentary time allows” including one establishing the rules and conditions for CMP scheme providers, the other making it mandatory for letting agents to join one of the schemes.
Other contributors to the consultation included NALS, the National Landlords Association, Residential Landlords Association, SafeAgent, the two remaining ombudsman services and UKALA.