The Property Ombudsman Scheme (TPO) is canvassing member firms over the provision of Client Money Protection (CMP) insurance.
'Whilst membership of TPO requires all residential sales and letting agents to abide by the TPO Codes of Practice, have Professional Indemnity Insurance, and agents holding clients' money to deposit this money in a separate clients account, it does not currently require residential letting agents to hold CMP,' explains Bill McClintock, chairman of the TPO operating company who is circulating a consultation document to members.
'Given that the Code of Practice is generally accepted as the primary standards document in the industry, the omission of such an important aspect needs to be addressed.
'This is something the board and the Ombudsman, Christopher Hamer, have been considering for some time and recent incidences of both landlords and tenants suffering financial loss means action on CMP is now imperative. Private residential lettings reportedly make up 17 per cent of the UK housing stock.'
The consultation paper sets out various options and points out that members of ARLA, NALS, and RICS are required to have CMP. Some letting and management companies acting as subcontractors also provide CMP on all landlord and tenant funds.
McClintock is asking TPO members which of these options, or an alternative fallback position that all TPO member firms without CMP must disclose it in writing and actively flag its absence at the point of instruction or sale of services, they would prefer to see enforced through the TPO Lettings Code of Practice.
'TPO and its Codes of Practice are part of a consumer protection regime with the firm objective of raising standards in the industry,' adds McClintock. 'Whilst TPO cannot force agents to sign up to the Code, firms should see the Codes as enhancing the reputation of the industry and for those that are already members of TPO the addition of a clause requiring CMP will enable them to demonstrate to landlords and tenants that their money is protected.
'TPO is a not-for-profit company and will not itself offer CMP to member firms as a new revenue stream. It is not appropriate for TPO to offer such services but I believe it is appropriate for member firms to have such cover. However, members now have the opportunity to express what they think should be the minimum required standard.'