Slam dunk victory for ARLA on CMP

Thursday 30 March 2017

After a long drawn out fight, ARLA has finally won the battle to get the government to introduce mandatory CMP for all agents in England.

The official announcement which was read out in the House of Lords in response to a question posed by Baroness Hayter couldn't have come at a better time, as David Cox was able to announce the landmark victory to delegates at a packed-out ARLA Conference to cheers and applause.

Tenants and landlords using ARLA agents have always benefited from CMP and the fact that this will now become mandatory for all agents will bring greater level of protection for consumers which is something we're passionate about at ARLA Propertymark.

The Government has used powers granted under the Housing and Planning Act 2016 to bring in the changes following a Working Group review which made the recommendations for CMP to Housing Minister Gavin Barwell.

Parliamentary Under-Secretary of State Lord Bourne of Aberystwth, read out the announcement in the House of Lords on 28 March:

"...I am pleased to announce that the Government intend to make client money protection mandatory in line with the recommendation of the review chaired by the noble Baroness and the noble Lord, Lord Palmer of Childs Hill. This will ensure that every agent is offering the same level of protection, giving tenants and landlords the financial protection that they deserve. The Government will consult on how mandatory client money protection should be implemented and enforced."

As events unfolded, David Cox addressed delegates at ARLA Conference announcing the good news and read out ARLA Propertymark's official press release which was issued to national and trade press:    

"The Government has finally accepted ARLA Propertymark’s calls for mandatory CMP. This is an argument we have been making for some time alongside Baroness Hayter and Lord Palmer. Working together we have managed to convince the Government of the merit of compulsory CMP. It’s a campaign that’s taken over two years to come to fruition and is a clear step forward towards a more regulated industry; akin to others such as solicitors or travel agents. CMP safeguards landlords and tenants in the event that agents misappropriate their money. With the ban on letting agent fees on the horizon, this is more important than ever before, so we are very pleased the Government has agreed to take it forward."

ARLA Propertymark members were also sent an email on the same day to let them know of the victory and what it means for the industry. 

Speaking about the Government's announcement to accept the recommendations made by the working group, Baroness Hayter, said:

“...The evidence was overwhelming, and we recommended the government use its reserve powers to implement this. We are therefore delighted that the Government has accepted our recommendation as it will ensure tenants and landlords alike are provided with extra security in the lettings process. May I also extend special thanks to ARLA Propertymark for its role in marshalling the industry to back the measure and for providing the working group with real ‘on the ground’ evidence for why mandatory CMP is so desperately needed.”

What next?

We now await details of the consultation which should also give an indication of how it is going to be implemented and enforced, but it's clear in the recommendations and the language that the Government has used that they will take a hard stance, saying that agents handling money without CMP will be fined or shut down.

Other recommendations include:

  • Providers of CMP, redress schemes and trading standards to share information so that compliance can be checked
  • British Bankers Association in liaison with the Government to produce guidance for banks enabling the opening of client bank accounts without the need for evidence of due diligence on individual landlords
  • Measures of CMP should be linked to the work underway in the ban on letting agent fees for tenants

After the consultation is concluded, it's just a question of waiting for the implementation date, which is when the law will come into force and it's expected the Government will also issue guidance for agents, landlords and tenants. We will of course keep you updated as things progress.