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The working group investigating the demand for mandatory client money protection (CMP) has put forward their official recommendations to the Government strongly suggesting the introduction of compulsory CMP.
Facilitated by the Department of Communities and Local Government, the working group was tasked to consult with industry stakeholders to form a recommendation on whether or not to enforce CMP.
Since August last year, the working group have been considering evidence from various stakeholders, including letting agents themselves, from which they have found that 85% of respondents supported the case for compulsory CMP.
Following the publication, Housing Minister, Gavin Barwell, has publicly announced his acceptance of the findings – tweeting the below:
As an organisation committed to raising standards throughout the property industry, the Property Redress Scheme supports this announcement and looks forward to the positive impact it will bring to the private rented sector. Lord Monroe Palmer who co-chaired the CMP working group is also chair of the PRS Advisory Council.
Client money protection is a form of insurance that ensures landlords and tenants are reimbursed in the event of a letting or managing agent going into administration, or where the agent misappropriated their money whilst in their custody. Membership of a CMP scheme in England is currently not currently compulsory although it is a legal requirement for letting and property management agents to display whether they have client money protection or NOT. It is a current legal requirement in Wales and will be in Scotland from January 2018.
Our Head of Redress, Sean Hooker, supports the implementation of compulsory CMP: “With an increasingly growing rental sector and the money involved, the risk of serious economic damage that could easily occur without adequate safeguards is something we cannot be complacent about.”
Currently, agents can gain CMP on an annual membership basis with relevant professional associations such as ARLA, NALS, RICS and UKALA.
They may also choose to join a standalone scheme such as Client Money Protect that offers client money protection services without the need to join a professional association.
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Property Redress Scheme is approved by Government under the Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015