Client Money Protection: Is your letting agent covered?

Published on Monday, 15 May 2017.

SAFEagent campaign urges consumers to make sure their money is 'SAFE'

A national consumer awareness campaign launches today (15th May) to help more landlords and tenants understand the importance of making sure their letting agent is registered with a Client Money Protection (CMP) scheme.

SAFEagent Awareness Week will run between 15th and 19 May to raise awareness of CMP, which an insurance product for letting agents. CMP protects the rental money that a tenant pays their letting agent to pass onto a landlord. Few landlords or tenants are aware of CMP and how it can safeguard rental money if an agent attempts to use client funds fraudulently.

A recent Government report estimated that letting agents hold approximately £2.7 billion in client funds and the Housing Minster has now confirmed that the Government plans to make CMP mandatory for letting agents, following an official review which TPO contributed to in 2016. A consultation is due to take place in 2017 before the Government makes CMP a legal requirement.

TPO is urging agents to review the options available to them and ensure they have their CMP cover in place before it becomes a legal requirement.

Gerry Fitzjohn, TPO Board Chairman, said:

“If you do not have CMP cover in place, now is the time to review your options. Agents can contact their trade bodies to find out what cover they can provide and Lonsdale was one of the first insurance brokers to offer CMP cover to agents that do not belong to a trade body, which has developed an exclusive product for TPO agents.”

What does the current law require?

Current legislation requires agents to disclose whether or not they have CMP cover but the Government launched a CMP working group last autumn to look at how CMP is currently operating and whether to go further by making use of the powers taken through the Housing and Planning Act 2016 to make it mandatory. The report recommends that CMP becomes mandatory for letting agents in England that handle client money.

If you are an agent and you do not have CMP cover in place, now is the time to review your options (see below).

Enforcement action

Current legislation requires letting agents to display whether they have CMP or not. Trading Standards officers have enforcement powers and can fine agents a civil penalty of up to £5,000 (payable to the council) for each office where the information is not published. There will also be a fine of up to £5,000 if the information is not published on an agent’s website.

How can agents find out more about CMP cover?

CMP cover is available through a number of providers - agents can access cover through their trade association or Lonsdale, which was one of the first insurance brokers to offer CMP cover to agents that do not belong to a trade body.

TPO has an exclusive agreement with Lonsdale, which offers TPO members comprehensive Professional Indemnity Insurance and Client Money Protection.

Further information on the PI + CMP scheme can be found by clicking here.

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