Client Money Protection is now Mandatory for Letting Agents

April 7, 2019
Client money protection

Client Money Protection (CMP) is something that has been needed for a long time.

Letting agents generally hold huge amounts of other peoples money – mostly rent and tenancy deposits. 

However when the letting agency business fails – all too often the funds held for their landlords have been spent on the agent’s debts and there is nothing left to pay the money back to its rightful owners.

Mostly this will be landlords.  Letting agents will also hold tenants money in the form of deposits.  However, the tenants will not suffer ultimately if their deposit is lost as they will be refunded by the tenancy deposit scheme.

However, tenancy deposit protection schemes protect tenants – not landlords. 

When a scheme has had to pay out to tenants after a deposit has been lost by agents, they will normally expect the landlord to reimburse them.  As landlords are ultimately responsible.

So the real beneficiaries of the CMP schemes are landlords.

If you are a letting agent

The following schemes are currently active:

Although CMP with some of these schemes is only available to the scheme members.

Agents must also:

  • hold client money in a client money account with a bank or building society authorised by the Financial Conduct Authority*
  • hold and maintain appropriate professional indemnity insurance
  • have appropriate client money protection handling procedures
  • obtain a certificate confirming membership of an approved CMP scheme and display this prominently in each of their offices where they deal with the public and on their website
  • provide a copy of the certificate to any person who may reasonably require it, free of charge

One of the problems that some agents have found is opening a client money account – as banks are sometimes difficult about this.  

Your scheme may, however, be able to help you with this.  For example, the Client Money Protect scheme run by Hamilton Fraser have details of banks who may be willing to assist.  

CMP schemes are permitted to allow you a grace period to open the accounts until 1 April 2020.


You should now make sure your letting agent is a member of a scheme.  

You can do this but checking with the agent – who should be displaying the certificate from their scheme in their office and on their website.

You can also contact the CMP scheme direct to check that the agent is actually a  member.

One of the problems that some agents have found in setting up CMP is opening a client money account - as banks are sometimes difficult about this.   #landlordlaw

Not a Landlord Law member?  Find out more here.
Important – please check the date of the post above.  Remember if it is an old post, the law may have changed since it was written.
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