Client Money Protection (CMP) is a compensation scheme which remunerates landlords and tenants if an agent misappropriates rent, deposit or other client funds. It is a requirement for NAEA Propertymark members to have CMP if their business includes lettings or property management, ensuring the membership obtained has the level of compensation available which isn’t less than the maximum amount of client money held.
Approved schemes
The Government has approved CMP schemes for letting and property management agents in the private rented sector, and they include:
Transparency
There are various transparency requirements to show compliance, and customers and prospective customers are supplied with all the information, as well as displaying and publishing all relevant certificates and documentation. Certificates must be:
- Displayed prominently in all premises
- Published on the agent’s website
- Produce, free-of-charge, a copy for anyone who requests it
Change of circumstances
When membership of an approved scheme is revoked, ceases or changes all clients must be notified within 14 days furnishing them with details the new scheme.
Enforcement
Every local authority in England has the responsibility to enforce the requirements and they follow any guidance provided by the Secretary of State. The local authority can impose a financial penalty for any breaches, as well as those that occur outside their area.
Penalties
There will be civil penalties of up to £30,000 for non-compliance within the requirements to belong to a scheme, which is kept by the local authority to fund enforcement.
Rogue letting agent Manish Manek was found guilty of 17 counts of theft involving tenants’ deposits and rent owed to landlords. He stole £47,000 before fleeing the UK in October 2012. A police investigation found that Manek had been putting tenant deposits and rent into his personal account.
He was finally arrested and sentenced to jail leaving landlords and tenants out of pocket. His victims never saw their money returned.
It is estimated that letting agents currently hold approximately £2.7 billion in client funds and yet, if a letting agent is not covered by CMP, both landlords and tenants could stand to lose their money.
Resources and further information for members
A Client Money Protection (CMP) leaflet can be downloaded to send to your clients and hard copies are available from our online shop too. A detailed and comprehensive Fact Sheet can also be accessed by member’s.
Propertymark's Client Money Protection scheme secures Government approval
Propertymark has received formal approval from the Housing Minister, Heather Wheeler MP, to operate a Government-authorised Client Money Protection (CMP) Scheme.