Why is CMP important?
It has been estimated that letting agents hold approximately £2.7 billion in client funds at any one time and yet, if they are not covered by Client Money Protection, both the landlord and tenant stand to lose their money. Before regulation, it was thought £700 million is not protected, leaving tenants and landlords vulnerable to agents who go out of business or abscond
CMP ensures that funds are held in a designated client account and in the event of an agency going bust or misappropriating funds, it offers landlords and tenants a route to compensation.
Case studies
Martin fronted a string of letting agencies and used numerous aliases between 2009 and 2015 to pocket £221,000 from more than 60 tenants and landlords. He repeatedly offered tenants properties he had no right to let out, took deposits from multiple tenants for the same property, moved in different tenants than those promised and used a variety of methods/excuses to hold on to thousands in deposits and rents.
David stole £123,000 from landlords, pocketing rent and deposits paid by tenants rather than passing the cash to his clients over four years. During this time, he put tenants' rent and deposits into the company's 'working capital' account.
Janine of Stour Provost took money from a branch of Dorset Lettings, which she ran under franchise. Police investigations uncovered that financial records showed Janine paid for Mediterranean cruises and a £7,000 Welsh pony with the proceeds.
The situation caused much stress and worry for staff, landlords, tenants and suppliers. However, the agency was ARLA Propertymark Protected so landlords and tenants were able to recoup their losses through our CMP scheme.
Westminster lobbying
Victory in our campaign for mandatory Client Money Protection (CMP) in England
November 2015
We responded to DCLG’s technical discussion paper, which formulated many policies in the Housing and Planning Act 2016. We provided written and oral evidence to the Public Bill Committee in the House of Commons who were scrutinising the Housing and Planning Bill before it became an Act of Parliament. At the oral session, we were asked by MPs to provide further details about the type of amendment we would like to see for CMP.
February 2016
Baroness Hayter reintroduced the CMP amendment when the Bill was looked at by the House of Lords after the amendment was initially withdrawn in the House of Commons in December 2015. Our members wrote to the members of the House of Lords urging them to support the amendment.
The Bill went back to the Commons and the Government introduced an enabling power to make regulations to require letting agents in England to have CMP.
September 2016
We responded to the CMP review and gave evidence to a closed session of Peers in the House of Lords to outline why the introduction of mandatory CMP for the whole sector is vital.
December 2017
Mandatory CMP moved a step closer with a consultation inviting views on how the rules should be designed, implemented and enforced. The consultation posed nine key questions including minimum levels of cover, the impact on the size of different businesses and whether Trading Standards should enforce the rules and penalties for non-compliance. Read our response.
April 2018
The Government published its response to the consultation on the introduction of mandatory CMP for letting agents. They announced that legislation will be brought forward to introduce privately led CMP schemes and civil penalties of up to £30,000 for agents who fail to comply.
CMP was voluntary at the time with approximately 60 per cent of letting agents signed up to a scheme. By making CMP mandatory, it ensures that every agent is offering the same level of protection and gives tenants and landlords the financial protection they deserve.
May 2018
The Government laid regulations that, if passed by parliament, would require all agents managing lettings in England to belong to an approved CMP scheme by 1 April 2019. The draft regulations gave Local Authorities the powers to:
- Impose fines of up to £30,000 on agents who do not belong to a scheme beyond this date.
- Impose fines of up to £5,000 on agents who fail to display the correct scheme details on their premises and website.
December 2018
Parliament amended the CMP regulations during the legislative process of the Tenant Fees Act. The amendment clarified that government-approved CMP schemes will not be required to cover money protected in one of the three permitted tenancy deposit schemes. The amendment tabled by Baroness Hayter of Kentish Town allowed for the CMP regulations to come into force from 1 April 2019, ahead of the ban on tenant fees.
February 2019
We received formal approval from the Housing Minister to operate as a government-authorised CMP Scheme.
Pooled Client Accounts, campaigning for improved guidance
We welcomed improved Joint Money Laundering Steering Group (JMLSG) guidance on Pooled Client Accounts (PCAs) following our response to JMLSG’s review and sustained engagement with HM Treasury and UK Finance to make it easier for letting agents to meet their legal obligations.
Propertymark lobbying leads to hope for pooled client account access
A consultation launched by HM Treasury could be the catalyst for change in the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 and end the ongoing problem of access to appropriate banking services for letting agents, which is the result of banks failing to properly understand how client money protection and anti-money laundering apply to unregulated firms.
Propertymark consulted on the difficulties of Pooled Client Accounts
Proposals to address difficulties in accessing banking services are being developed and a consultation will begin later in 2023. Following our letter to the Chancellor of the Exchequer in August 2023, Treasury Lords Minister Baroness Penn responded seeking our engagement through this process.
The Chancellor needs to act on the closure of pooled client accounts
Following a series of high-profile account closures, Propertymark has written to the Rt Hon Jeremy Hunt MP highlighting the ongoing issues and pushing for action from the UK Government to find solutions that reduce barriers for letting agents to operate.
Propertymark pressure leads to improved guidance on Pooled Client Accounts
We welcome improved Joint Money Laundering Steering Group (JMLSG) guidance on Pooled Client Accounts (PCAs) following our response to their review and sustained engagement with HM Treasury and UK Finance to make it easier for letting agents to meet their legal obligations.
Joint Money Laundering Steering Group (JMLSG) proposed draft guidance on Pooled Client Accounts
We responded to the JMLSG proposed draft guidance on Pooled Client Accounts outlining that the banks' expectations of letting agents do not coincide with the legal requirements for Anti-Money Laundering (AML) and Client Money Protection (CMP) regulations.