The government has approved the following client money protection (CMP) schemes for letting and property management agents in the private rented sector:
The government is considering other applications.
Letting and property management agents in the private rented sector who hold client money are now required by law to belong to a government-approved CMP scheme by 1 April 2019. These proposals were made on 1 April 2018 following consultation and have been passed by Parliament; agents must also:
- hold client money in a client money account with a bank or building society authorised by the Financial Conduct Authority*
- hold and maintain appropriate professional indemnity insurance
- have appropriate client money protection handling procedures
- obtain a certificate confirming membership of an approved CMP scheme and display this prominently in each of their offices where they deal with the public and on their website
- provide a copy of the certificate to any person who may reasonably require it, free of charge
CMP schemes may set additional requirements on membership.
If an agent fails to comply with the legal requirement to become a member of an approved CMP scheme, they will be liable for a penalty of up to £30,000. An agent will also be liable for a penalty of up to £5,000 for failing to comply with the legal requirement to display their certificate of membership from an approved CMP scheme.
This is separate from existing requirements to protect tenancy deposits.
*Or be making all reasonable efforts to do so. Note that while CMP schemes are permitted to offer a grace period to allow agents to open such accounts, they may only offer a grace period until 1 April 2020.