Letting agents must join a Client Money Protection scheme now or face large fines
As of 1 April 2019 letting agents must join a Client Money Protection (CMP) scheme or face fines of up to £5,000 for trading illegally. The new law follows numerous cases of letting agents who have used client funds illegally. The CMP scheme ensures that such funds will be protected from theft or misuse.
There are six approved organisations that offer a CMP scheme: Client Money Protect, Money Shield, NALS, Propertymark, RICS and UKALA.
In addition to joining a CMP scheme, letting agents must meet other new requirements including:
- ensuring a CMP certificate is displayed in each branch and on their websites
- maintaining a separate bank account for client funds
- holding the right level of indemnity insurance
- a requirement to display their Client Money Handling Procedures on their websites and present hard copies upon request.
Guidance for Landlords
Do not sign up to an agreement with a letting agent without asking to see a copy of their CMP certificate and asking which organisation provides this cover for them.
Do not hand over any money without clarification that the agent is a member of a CMP scheme. This will ensure that your money is safe and that the agent is not a rogue operator.
What are the benefits to the letting agents?
The CMP protects your client’s money and helps you stand out as a trusting agency with the Client Money Protection scheme. The cost of the levy all depends on the amount of money held in a client account and the turnover of the agency. Costs range from £360 to £4,685 per year depending on the provider.
For more information on the Client Money Protection scheme and wider guidance for letting agents and landlords, please email Sam Sperring