MPs have approved the government’s proposal to give agents a further year to conform to Client Money Protection or CMP rules, but warned the industry that this is their last chance saloon to get on board and that the remaining non-compliant agents should ‘pull their fingers out’ and get on board.
The comments were made last night when a dozen or so MPs gathered in a committee room to debate whether letting agents should be given the 12 month extension, which has been granted for two reasons.
There are still 251 letting agencies, or 2.5% of the 10,000 registered with CMP schemes, who are struggling to find a bank who will provide them with a pooled account to handle client payment, as the regulations require. Researech by Hamilton Fraser recently found that 20% of all agents were not members of a CMP scheme yet.
This is an improvement on June last year, when 458 letting agents reported problems.
The new housing minister Chris Pincher (pictured) explained that banks are required to check both agents and their clients for money laundering purposes but that pooled accounts make this difficult.
Money laundering risk
Some banks believe such accounts, which can hold payments for thousands of customers, are a significant money laundering risk because dirty cash can be processed through them with relative ease.
But Pincher was criticised during the debate because a government committee, the Joint Money Laundering Steering Group, which was due to provide guidance on the money laundering implications of the CMP scheme, is late reporting ‘due to the unexpected complexity’ of the subject. It will now report later this spring.
The minister urged the six organisations who are licenced to offer CMP services that they must encourage the remaining agents who have not secured pooled client accounts to ‘pull their fingers out’.
Alex Cunningham, Labour’s shadow housing minister, was critical of the delays, asking: “How can the government claim to be making renting fairer when it can’t even organise a simple client money protection scheme?”.