15:44 PM, 13th February 2023, About 10 months ago 1
There are six Government-approved Client Money Protection (CMP) schemes available to agents including one run by Propertymark
The insurance schemes are designed to reimburse landlords and tenants if client money is stolen by a third party, lost, a letting agency misappropriates it or the business goes into administration.
The Government made it compulsory for English agencies from April 2019 to carry valid Client Money Protection Insurance and it is also a legal requirement in Scotland and Wales. The requirement applies to any agent that handles client money.
In a recent example, an agency did have a valid CMP policy but was still fined £24,000, because the director named in the policy resigned and no one updated the insurer.
PayProp Managing Director Neil Cobbold said, “The worry has always been that when a new policy is implemented across the PRS, there is little enforcement to catch those that flout the rules.
“But with over £3m in penalty notices issued across London last year, it is clear that any honeymoon period for CMP compliance is well and truly over and local authorities see lettings businesses as either compliant or not – there is no grey area.”
“This is not an MoT situation. Compliance is not health-checked once a year. It is a rolling statutory obligation. When agents are providing details to their CMP provider, they will want to see detailed records of an agency’s client account, including bank statements from the FCA-authorised bank or building society client account provider – so agents must have these to hand.
“Every approved CMP scheme is different, so supplying the correct documentation can be a challenge. But our support team can assist our clients with understanding exactly what is needed from each CMP provider, helping them to keep compliant and free from the heavy fines that could put their businesses at risk.”
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