On 27 March 2017 Housing Minster Gavin Barwell confirmed via twitter, that Client Money Protection Insurance would be made mandatory for agents in England following the recommendation of a working group set up in Autumn 2016.
What is Client Money Protection Insurance?
CMP ensures the money that a landlord or tenant pays to a letting agent is safely protected against misappropriation by the agency.
Letting agents that have CMP must maintain and operate a separate account with their bank, where all client money is held separately from their operating funds. Examples of client money can include tenants’ deposits (before and after they’re protected), landlords’ repair funds, rents, service charges and arbitration fees. So, in the unlikely event that money is mishandled by the agent, the landlord or tenant’s money is secure, and they can make a claim from the relevant CMP insurance scheme for its return.
How do I get CMP?
CMP is usually obtained as part of trade association membership. So if you join UKALA, ARLA, NALS, RICS or the NAEA then CMP is an automatic member benefit.
However, if being a member of a trade body doesn’t suit your business requirements then you can obtain standalone CMP cover from select providers, including Client Money Protect. Agents that are interested in a trade association membership should look at UKALA, who both mydeposits and Client Money Protect have a close working relationship.