Housing Minister cans requirement for Client Money Protection

by Property 118

9:37 AM, 7th January 2016
About 3 years ago

Housing Minister cans requirement for Client Money Protection

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Housing Minister cans requirement for Client Money Protection

The Housing minister, Brandon Lewis, opposed a clause in the new Housing and Planning Bill that would have required all letting agents to carry Client Money Protection insurance.Brandon Lewis

Teresa Pearce, Labour MP for Erith and Thamesmead, who proposed the clause indicating that there was industry support said,”The new clause is designed to protect both parties in the unlikely event that an agent goes into administration or misappropriates the client’s funds. Any losses could be recovered through the scheme.”

Mr Lewis countered saying “We want to ensure that we have a strong and thriving private rented sector that is not tied up in excessive regulation.

“Requiring agents to pay to belong to a client money protection scheme would force honest agents to buy insurance against the risk that they themselves were fraudulent, when, as the hon. Lady said, the vast majority of agencies are not.

“Introducing a mandatory Client Money Protection scheme at this point would be a step too far and would overburden a market that is perfectly capable of self-regulation.

“However, in May 2016 we will review the impact of the transparency measures that were put in place only recently.

“At that stage, I will take due consideration of whether any further action is needed, and obviously I will take into account the comments made this afternoon. I hope that, with those points in mind, the hon. Lady will withdraw the new Clause.”

The subsequent withdrawal of this clause has already been criticised by ARLA and their MD David Cox said, “It’s very disappointing the amendment requiring all letting agents to have Client Money Protection has not been successful especially when so many organisations from across the industry were supportive.

“However, we are pleased the minister has agreed to review the issue again in May.

“We should not be disheartened as it is a positive step that Client Money Protection is now firmly on politician’s radars and being discussed at the highest levels of Government. ARLA will continue to fight for mandatory Client Money Protection as a step on the road to a more appropriately regulated lettings industry.”



Comments

money manager

10:27 AM, 7th January 2016
About 3 years ago

So do they want a thriving PRS or not? Left hand right hand.

Gary Dully

11:09 AM, 7th January 2016
About 3 years ago

How do these Ministers ever formulate a strategy?

He seems to come up with an opportunity for some good in the rental property market and then starts to bugger it up and mess around with it.

He already has many Conservative colleagues that rent out property, does he ever speak to them?

We all want Crappy Landlords and Letting Agents to be held accountable, but what on Earth is coming out of this Housing Bill?

If he was a builder, he would be probably be sacked for leaving tiles off the roof or having outside toilets on a high rise block of flats.

If he managed a MacDonald's he would have pool tables and a dart board on the wall.

They should make him Minister of Childbirth and see how long he lasts.

Professional Landlords need a body that talks some common sense to these people, but who the hell have we got, that he will take notice of?

Michael Jerome

11:28 AM, 7th January 2016
About 3 years ago

I for one do not wish Client Money Protection to be mandatory. As a one man business, I am at the stage where I actually cannot obtain this protection as I personally administer all the funds, according to my insurers. There has recently been a case where £350,000 odd of client funds were embezilled by a manager of a local letting agents and I can see the need for CMI in this case. The problem is I have to jump through all sorts of hoops just to keep open. Surely, a better solution would be to create a scheme whereby anyone having access to client funds is vetted properly and the ARLA rules for financial controls are more rigidly enforced. It appears this is not being done at the moment.

So many controls such as mandatory CPI are stifling the lettings industry and keeping lettings "Fat Cats" and insurance pedlars in far too strong a position!

Adam Hosker

11:29 AM, 7th January 2016
About 3 years ago

A surprise, the Housing Minister makes a sensible decision on the lettings market.

There is no need for mandatory "when i steal your money insurance" the majority of landlords will have to pay for the minority of landlords that use dodgy agents.

Those that think there agent will steal there monies, can easily find one with client money protection. They can even still use agents that don't and get a "personal guarantee signed".

If you steal my rent - im going to take your possessions and perhaps make you bankrupt. Is a great tool!

money manager

12:14 PM, 7th January 2016
About 3 years ago

Regulation has ensured that very few people in the UK now ever receive any kind of face to face financial advice good, or bad. The government laments this despite it and the former FSA proposing all manner of cockamany schemes. The FCA responds by ...increasing fees by another 35%.

DALE ROBERTS

14:10 PM, 7th January 2016
About 3 years ago

Reply to the comment left by "Adam Hosker" at "07/01/2016 - 11:29":

@ Adam Hosker.
There has recently been a very public expose on Oliver-Knights in the UK, a letting and managing agency who have been in business for many years. Not only did they belong to a recognised deposit protection scheme, but they were also a member of the Property Ombudsman. Last year, they deliberately defrauded both tenants and Landlords of a substantial amount of money and when this fraud became too difficult to continue to hide, they emptied their bank accounts, ceased trading as the existing company and re-opened with the same staff in the same premises with a slight name change. Apparently this is not an unusual practise in the UK. Neither the Property Ombudsman nor the deposit protection scheme could/would assist in this instance as the original Oliver-Knights had ceased (sic) trading.
Your premise that this is not industry supported is false. Both Landlords and tenants need this regulation for further protection. It should be mandatory. It also offers protection to the agencies.
The Oliver-Knights fiasco merely proves that the industry cannot regulate itself and that the transparency required by all parties is sadly lacking.
Finally, please elaborate on your final comment with regards to the numerous landlords and tenants who are owed hundreds of thousands of pounds when agencies like Oliver-Knights close down. I can assure you, there isn't an organisation in the UK who have taken up this matter and held them accountable.

Romain Garcin

14:58 PM, 7th January 2016
About 3 years ago

If landlords want agents to have CMP then agents will get CMP or go out of business.
Those who think CMP is important should advertise it and educate landlords, and let landlords (aka the market) decide.

It is much less clear to me how CMP might benefit tenants.

Gary Dully

13:40 PM, 8th January 2016
About 3 years ago

Reply to the comment left by "Adam Hosker" at "07/01/2016 - 11:29":

Here's another surprise!

I have considered that my original comment was based upon my frustration about the proposed change concerning 'Abandonment', so as far as my comment relating to the theft of money by dodgy letting agents goes, I will concede to my peers.

However, I am not happy about dealing with both tenants and landlord is on a fair and equal basis.

I still feel,and that means it's probably true, that we do not have a suitable trade spokesperson or organization that is getting our voices heard.

Rob Crawford

10:02 AM, 9th January 2016
About 3 years ago

Reply to the comment left by "Michael Jerome" at "07/01/2016 - 11:28":

For the smaller Agents the cost of CMPI is expensive or even unaffordable. If the premium was based on lower turnovers to facilitate the smaller agent I am sure it would be better supported. Similarly (but out of context here) advertising!

money manager

13:17 PM, 9th January 2016
About 3 years ago

Reply to the comment left by "DALE ROBERTS" at "07/01/2016 - 14:10":

Not quite so.
If the directors either committed fraud or were guilty of wrongfull trading they potentially lose the protection of limited liability.

I would think that any CMPI provider would look to ensure that claimants had pusued those routes first.

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