Today [19 March 2018], key provisions relating to client money protection, as published by the government in February, come into force, allowing the secretary of state to pass regulations. Although the exact details of when and how the system will work are yet to be confirmed, Tim Frome, Associate Director at Hamilton Fraser, administrator for an existing scheme called Client Money Protect (CMP), says regulation is imminent and letting agents, relocation agents, and property managers in England may be required to join an approved CMP scheme as early as April 2018.
He comments: “After being heavily involved in the two consultations to date, I am delighted that the Government appears to be following Scotland and Wales in moving quickly to make membership of a client money protection scheme compulsory for letting agents in England. With key provisions in place, the groundwork has been laid for CMP regulations to be introduced, the details of which are likely to be unveiled in April when most regulations appear.”
Membership of a client money protection scheme protects the money of landlords and tenants against theft or misappropriation by the owners of a letting agent whilst it is in their custody. This could include monies such as tenants’ deposits and landlords’ rental payments, or funds held for repairs and maintenance to a property.
Agents who are already a member of a trade body or association such as NALS or ARLA Propertymark will already have client money protection but for those SME letting agents who are not, client money protection is also an option. It is already a legal requirement for letting agents in England to display whether they are a member of a client money protection scheme or not.
However, mandatory client money protection for all letting agents has now moved a step closer with Lord Palmer of Childs Hill, who co-chaired the consultation committee alongside Labour’s Baroness Hayter, stating: “I am delighted to say that Government is committed to making membership of a CMP scheme mandatory, based on the review which I co-chaired. I expect the regulations to be finalised and released very shortly.”
It is likely there will be a couple of approved CMP schemes for agents, who don’t already have cover, to choose from, and failure to join a scheme is likely to be enforced by financial penalties which will be levied by local authorities or trading standards.