TPO Backs Client Money Protection and Calls for More Landlords to Seek the Greatest Protection Rather than the Cheapest Fee When Choosing a Letting Agent
Fresh calls for letting agents to offer Client Money Protection have been backed by the Property Ombudsman (TPO) scheme in the wake of several high-profile cases where landlords have lost thousands of pounds in rental income by dealing with an agent that did not have sufficient cover to protect consumers from rental fraud.
The Codes, which will be effective from 1st August 2014 and reflect the developments in industry practice and legislative changes affecting both consumers and agents.
TPO's support for Client Money Protection (CMP) comes almost a year since the cover became available to the whole of the lettings industry through trade bodies and insurance brokers.
TPO provides a free, fair and impartial dispute resolution service for consumers. The scheme operates a one-off membership fee for agents and does not charge any case fees to ensure every registered agent is able to refer complaints to the Ombudsman if they cannot reach a resolution with the consumer directly. With more than 11,000 lettings agents already voluntarily following TPO's unique Code of Practice, the scheme represents more than 60% of the industry.
Gerry Fitzjohn, Chief Operating Officer of TPO said:
'As the UK's largest property redress scheme, it's truly upsetting to hear of cases where landlords have lost thousands of pounds in rent paid to an agent that has been used unlawfully and cannot be recovered because the agent did not have CMP cover in place.
'Rather than choose to use an agent that charges the lowest fee, landlords must ask if the agent has a CMP policy in place to protect their rental income.
'Within the industry, thousands of agents are already CMP protected but there are still a number of firms that are unaware of the scale of protection it offers. A TPO survey1 even revealed that some agents wrongly thought CMP duplicated the deposit protection schemes when that simply isn't the case.
'With more people renting now than ever before, landlords and agents need to understand that CMP provides the guaranteed assurance that the rent collected by CMP protected agents is covered against fraud and unlawful use.
'TPO wholeheartedly supports CMP cover – the more the industry speaks out about this issue to raise awareness the better.
More than £23 billion is paid annually in rent, of which £6 - £10 billion is collected by agents on behalf of landlords2. With 80% of TPO's letting agents understood to have CMP cover through their trade body or an independent insurance broker, landlords are being urged to ask their letting agent if has CMP cover to protect the landlord's rental income.
Susie Crolla, CEO of the Guild of Letting & Management, extended her support by saying:
'I feel it is important that we demonstrate best practice in everything that we do; even when there is as yet no legal requirement for us to do so. From 1 October 2014, therefore, being registered with TPO and having CMP cover will become a mandatory condition of membership for The Guild Subscription.
'While many members of The Guild are already registered and covered, this decision is an important step akin to an ‘outward sign of inward grace'. It sends a message to our stakeholders that we are serious about adopting the highest standards of professionalism and integrity as an organisation that is progressive and can be trusted.'
Oliver Wharmby of Lonsdale Insurance Brokers Ltd, which operates the PI + CMP scheme, said:
'Recent press headlines have really hit home how rental fraud can affect agents of all sizes. Smaller firms may initially question the cost of CMP cover but all it takes is one rogue employee and innocent directors can find themselves in awful trouble with their landlords and the police.
'Consumer education is key – agents must use their CMP cover as a point of difference over competitors. We're hearing that more landlords are starting to ask the right questions which is driving more agents to seek cover. However, it's only when every landlord insists their agent offers them CMP protection that we will see a level-playing field where CMP is offered by all.'
'Our PI + CMP scheme is offered exclusively to agents registered with TPO and lets consumers know the agent has comprehensive Professional Indemnity Insurance and Client Money Protection.'
[1] TPO surveyed 8,000 lettings branches to assess the viewpoints of registered agents. The results revealed an overwhelming number of agents backed CMP, with 80% already protected.
[2] Source: Professor Michael Ball of Reading University in a report commissioned by the independent Council of TPO. Publish date: October 2012