Safe Hands: Client Money Protection Schemes
Changing the law of the land can be a slow process even for topics that capture the public imagination, and Client Money Protection schemes are unlikely to sell many newspapers or win many votes. A new law comes into force on 1st April 2019, making Client Money Protection schemes mandatory for property and letting agents, and bringing to a logical conclusion five years of gradual legal change.
Handling Client Money
An agency that operates a Client Money Protection scheme has in place a system for handling client money that is overseen by a third party and fully insured. The thought is that agencies operating such a system will be in a position where it is harder to defraud the landlords and tenants whose money they are handling.
Since 2015 it has been a legal requirement for letting agencies to tell tenants and landlords whether or not they use a Client Money Protection scheme. In 2017, the government held a consultation on whether to make such schemes mandatory. Responses were encouraged from across the sector. Landlords, tenants, local authorities and housing associations were all consulted, 42% of respondents were letting agents.
The majority of those consulted agreed that a mandatory scheme was a good idea and that it should be market led rather than government controlled, similar to the schemes already in place for protecting tenant deposits.
From 1st April, it will be required by law that property management and letting agents in the private rented sector belong to a government-recognised Client Money Protection scheme. All agents must also:
- Hold client money in a separate client money account.
- Maintain appropriate professional indemnity insurance.
- Have in place appropriate Client Money Protection handling procedures.
- Display a certificate confirming membership of a CMP scheme in their offices and on their website.
At Pearl Lettings, we belong to the scheme overseen by Client Money Protect, you can see their accreditation in the footer on every page of our website.
If you would like to know more about any of the protections that we have in place for the landlords and tenants whose money we handle, please don’t hesitate to get in touch. You can call us on 01603 980770 or email email@example.com