Client Money Protection with become mandatory

While as ARLA members, Pace are already required to have Client Money Protection (CMP), from April 1st 2019, all letting agents must belong to a Government approved CMP scheme. In short, a Client Money Protection scheme provides compensation to landlords, tenants and other clients should an agent misappropriate their rent, deposit or other client funds.

This new measure will offer greater protection to consumers, improve the reputation of the sector and bring all agents up to the professional standards that existing ARLA members already represent.

About the regulations

There are two regulations, the first – Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2018 – outlines the requirement for agents, whilst the second is aimed at the scheme providers themselves.

Agents must:

  • Belong to a Government approved CMP scheme
  • Display a certificate which confirms the agent’s membership to an approved CMP scheme
  • Produce a copy of the certificate to anyone who reasonably requires it, free of charge
  • Notify all clients within 14 days if their CMP membership is revoked, or they change to a different approved CMP scheme
  • Provide clients with the name and address of the scheme to which they become a member

The regulations also state that the agent must ensure the level of CMP membership provides sufficient cover to compensate clients for the maximum amount of client money that they hold.

Local Authorities will have the powers to:

  • Impose fines of up to £30,000 on agents who do not belong to a scheme beyond this date
  • Impose fines of up to £5,000 on agents who fail to display correct scheme membership details on the business premises and on websites

It’s also important to note that if an agency is in breach of the regulations, they will be deemed to have been in breach of the regulation across all local authority areas in which they operate.

The second Statutory Instrument is aimed at the CMP providers themselves, and a summary is given below:

Government approved CMP schemes must:

  • Have written procedures for handling client money, which they must follow
  • Publish their procedures for handling client money on their website
  • Provide a copy of their procedures for handling client money to any person who may reasonably require a copy, free of charge
  • Keep records and accounts that show all dealings with client money;
  • Repay any client money, including where feasible any interest earned, without delay if there is no longer any requirement to retain that money or the client requests it
  • Hold client money in a client money account with a bank or building society authorised by the Financial Conduct Authority; and
  • Hold and maintain professional indemnity insurance cover that is appropriate for the member’s size, income, type of work and the amount of client money held.

We feel the introduction of mandatory CMP is a positive step and shows the Government are keen to assist with professionalising the sector.

Should you have any concerns about CMP, please call the Pace office and we will be happy to answer your questions.

lettings agent southend on sea - crystal horwood

Crystal joined Pace in 2007 and was appointed to her current role of Managing Director in 2010, heading up the company founded by her father in 1994.

She is responsible for the daily operations of the business, whilst also ensuring the company is financially sound, has strategic direction and is planning for future growth.

Crystal takes a thoughtful and considered approach to all that she does, transferring her determination to deliver implicit care, attention and professionalism to every member of her team.

Pace employ 20 full time staff. Meet the key team members here.