Client Money Protection (CMP) is a scheme which was introduced in a bid to protect your clients’ money. It ensures that your clients will be compensated should you go into administration or be unable to pay your landlords and/or tenants.
You must hold your clients’ money in a designated client account with a bank or building society which has been authorised by the Financial Conduct Authority. You must then register with an approved scheme and display your membership certificate on your website, in any office where you deal with the public and it must also be made available, free of charge, to anyone who requests it.
Gov.uk has a list of approved schemes on their website. Alternatively, feel free to give us a call on 07909 094481 and we’ll be more than happy to point you in the right direction.
What does CMP protect against?
The CMP scheme will protect any money a landlord loses when it comes to repairs, rent, service charges and arbitration fees.
If a tenant pays a deposit, it must also be protected in a government authorised Tenancy Deposit Protection (TDP) scheme. This ensures the money is safe and can be returned at the end of the rental period. A lot of agents are using custodial schemes these days, as it is felt by some that this assists with the administration of the return of the deposit at the end of the tenancy.
Why do letting agents have to comply with CMP?
From 1st April 2019, it became law for all letting or property management agents in the private rented sector to sign up to a government-approved CMP scheme. Failure to do so could land you with a £30,000 fine. Not displaying your certificate or providing it when asked can also see you hit with a £5,000 penalty.
Despite it now being a legal requirement, we still see agents who aren’t displaying their CMP certificate or processes on their website. To avoid being hit with a hefty £30,000 fine, please get in touch with Hughes Consultancy Services and we’ll ensure you are compliant with current legislation.