Client Money Protection (CMP)

Client Money Protection (CMP) is a scheme that reimburses landlords and tenants should an agent misappropriate their rent, deposit or other client funds. It has long been a requirement for ARLA Propertymark members to have CMP and is now mandatory for all letting agents.

Victory in our campaign for mandatory CMP

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'My Lords, I thank the noble Baroness and the noble Lord, Lord Palmer of Childs Hill, for their time and commitment to the client money protection review. 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'.

Lord Bourne of Aberystwyth
The Parliamentary Under-Secretary of State DCLG and Wales Office

Read the House of Lords Hansard transcript (28 March 2017)

ARLA Propertymark leading the campaign on CMP

We have long believed that all letting agents should belong to a CMP scheme because the many agents who don’t represent a greater risk to landlords and tenants. The reputation of the sector is undermined by the small minority of rogue agents who steal from tenants and their clients.

Before CMP became mandatory, it was estimated that £2.7 billion was held by letting agents at any one-time including rents and monies to cover maintenance. It was thought that £700 million of this total was not protected, leaving tenants and landlords vulnerable to agents who go bust or abscond.

David Cox

David Cox
Former ARLA Propertymark Chief Executive

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'After a long fight, ARLA Propertymark’s campaign for mandatory Client Money Protection (CMP) is finally won. With the help of Baroness Hayter of Kentish Town, and cross-party consensus in the House of Lords, this is a vital step forward in improving consumer protection in the rental sector; probably more so than the myriad of other laws passed over the last two decades.

‘We look forward to working with the Government to guarantee that the level playing field we’ve fought so hard to create becomes a reality on the 1st April next year’.

Why is Client Money Protection (CMP) important?

Letting agents hold a significant amount of money in the form of deposits and rent on behalf of tenants and landlords. CMP ensures that funds are held in a designated client account and in the event of an agency going bust or misappropriating funds, it offers landlords and tenants a route to compensation.

Case studies to support CMP

Martin Marcus, June 2016
Martin fronted a string of letting agencies and used numerous aliases between 2009 and 2015 to pocket £221,000 from more than 60 tenants and landlords. He repeatedly offered tenants properties he had no right to let out, took deposits from multiple tenants for the same property, moved in different tenants than those promised and used a variety of methods/excuses to hold on to thousands in deposits and rents.

David Whitefield, April 2016
David stole £123,000 from landlords, pocketing rent and deposits paid by tenants rather than passing the cash to his clients over four years. During this time, he put tenants' rent and deposits into the company's 'working capital' account.

Janine Pickett, December 2014
Janine of Stour Provost took money from a branch of Dorset Lettings, which she ran under franchise. Police investigations uncovered that financial records showed Janine paid for Mediterranean cruises and a £7,000 Welsh pony with the proceeds. The situation caused much stress and worry for staff, landlords, tenants and suppliers. However, the agency was ARLA Propertymark Protected so landlords and tenants were able to recoup their losses through Propertymark’s CMP scheme.

The journey towards mandatory CMP

We responded to DCLG’s technical discussion paper, which formulated many policies in the Housing and Planning Act 2016. We provided written and oral evidence to the Public Bill Committee in the House of Commons who were scrutinising the Housing and Planning Bill before it became an Act of Parliament. At the oral session, David Cox was asked by MPs to provide further details about the type of amendment we would like to see for CMP. Written evidence...

Baroness Hayter reintroduced the CMP amendment when the Bill was looked at by the House of Lords after the amendment was initially withdrawn in the House of Commons in December 2015. Our members wrote to the members of the House of Lords urging them to support the amendment. The Bill went back to the Commons and the Government introduced an enabling power to make regulations to require letting agents have CMP.

We responded to the CMP Review. David Cox gave evidence to a closed session of Peers in the House of Lords, he outlined why the introduction of mandatory CMP for the whole sector is vital. Our response...

Mandatory CMP for letting agents in England moved a step closer with the launch of a consultation inviting views on how the rules should be designed, implemented and enforced. The consultation posed nine key questions including minimum levels of cover, the impact on the size of different businesses and whether Trading Standards should enforce the rules and penalties for non-compliance. Our response...

APRIL 2018
The Government published its response to the consultation on the introduction of mandatory CMP for letting agents. They announced that legislation will be brought forward to introduce privately led CMP schemes and civil penalties of up to £30,000 for agents who fail to comply. CMP at this time is voluntary with approximately 60 per cent of letting agents signed up to a scheme. By making CMP mandatory, it ensures that every agent is offering the same level of protection and gives tenants and landlords the financial protection they deserve. Government's response...

MAY 2018
The Government laid regulations that, if passed by parliament, will require all agents managing lettings in England to belong to an approved CMP scheme by 1 April 2019. The draft regulations gave Local Authorities the powers to:

  • Impose fines of up to £30,000 on agents who do not belong to a scheme beyond this date.
  • Impose fines of up to £5,000 on agents who fail to display the correct scheme details on their premises and website.

Parliament amended the CMP regulations during the legislative process of the Tenant Fees Act. The amendment clarified that Government-approved CMP schemes will not be required to cover money protected in one of the three permitted tenancy deposit schemes. The amendment, tabled by Baroness Hayter of Kentish Town, allowed for the CMP regulations to come into force from 1 April 2019, ahead of the ban on tenant fees.