Insured Tenancy Deposit Scheme – Insurance Against What Exactly?Make Text Bigger
With letting agents going under and causing untold financial mayhem in their wake and in light of the failed Market Deeping agent mentioned in another thread this type of case raises issues with what an “insured” deposit scheme is actually covering.
In the hard times that we live in there are likely to be many more agents that could go the same way so this may be a useful place to get clarity on the matter.
In respect of the aforementioned letting agent, it was said that deposits were dealt with via My Deposits, which I assume is the insurance based scheme so my question is what exactly does the scheme insure against?
I imagine after finding that the letting agent no longer exists the tenant would go to the scheme administrator, in this case My Deposits and request the return of deposit. The administrator would then direct the tenant to the landlord, which in certain circumstances may not be that simple for various reasons, so isn’t the insurance scheme meant to cover the non-payment of a deposit by a landlord in these circumstances by invoking the insurance scheme to reimburse the tenant? I have read Schedule 10 of Sec 212 to the Housing Act 2004 a number of times and sub-section (e) covers this procedure, doesn’t it?
If this is not the case then what is the insurance actually protecting?
I understand the likelihood of a civil claim by the scheme administrator against the landlord to recover any monies they pay out to a tenant, however, is a letting agent considered to be part of an authorised deposit taking institution under FSCS rules? After all tenant deposit procedure is covered by its own law and probably accounts for millions of pounds so it isn’t just a small group of people collecting holiday money for a one-off trip.
If so I assume that either the landlord or My Deposits would have some redress for compensation in the above circumstances?
On the other hand, if the letting agent has not complied with the scheme by failing to keep any deposit monies in a separate client account, or has used the client money for other purposes then wouldn’t that amount to a criminal offence by the agent for which the landlord cannot be held responsible unless proved to be complicit in the act as well?
If this is the case with Bonnie and Clyde of Market Deeping are we to assume that either the landlord(s) or My Deposits will be making the necessary complaints to Lincolnshire Police in order that they can pursue all individuals involved in respect of any criminal wrong-doings? And before anyone mentions Limited Company blah blah, whether they are/were a limited company or not that does not preclude individuals from embezzlement of client money for unconnected purposes!
Constructive views on this subject would be appreciated as it is certainly of relevance to me and no doubt to many others also.
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