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Fine underlines importance of having CMP

Monday 15 March 2021

Propertymark has received a report that a letting agent in Kensington and Chelsea has been issued a fine of £20,000 for not belonging to a Client Money Protection scheme, despite applying to join one. The case underlines the importance of having Client Money Protection (CMP), with Trading standards taking action even when an application is in progress.

Trading Standards is increasingly acting against agents that don’t comply, meaning it is crucial for businesses to check they are displaying a valid certificate in-branch and online. It is particularly important for start-up agents or agencies with multiple legal entities to note the importance of having CMP in place for the business (or legal entity) which is actually handling the money before the business starts to trade.

Agents handling client money have been legally required to hold valid Client Money Protection scheme membership since April 2019. Recently over 100 agents in London have been investigated for not belonging to an approved CMP scheme. Depending on levels of non-compliance, the agents involved faced fines of up to £30,000 each.

The benefits of having CMP

Belonging to a CMP scheme builds trust between the business and client and upholds the professionalism of the agent. It is mandatory for all Principals, Partners, or Directors (PPD)’s of firms that act as agencies in property and handle client’s money or uses a third-party to oversee client money.

Under the regulations, agents must display a valid certificate confirming membership. They must also provide their client money handling procedures both online and hard copy, making it available to clients free of charge upon request.

Propertymark CMP and membership

The Propertymark CMP scheme reimburses landlords, tenants and other clients should an agent misappropriate their rent, deposit or other client funds. Tenancy Deposit Scheme (TDS) offers a £1.50 discount per tenancy deposit to members of our scheme. PPDs are automatically enrolled in the scheme when they become members unless they are already members of existing schemes.

PPDs of organisations that don’t have CMP may meet the criteria for Propertymark membership, contact the membership team for more information. The full requirements for Propertymark membership can be found on our website.

Members must display valid certification in all branches of the business. Certificates can be requested by emailing our Membership team. All branches must be up to date on our Find An Expert section, so we can list the number of branches against each firm. A branch list is included with the company declaration if amendments are to be made.

Members can also login to the online shop for a leaflet to give to clients to explain the client money protection they receive from a Propertymark Protected expert.

PPDs who have recently set up a business that handles client’s money must complete a company declaration form. This will help us establish the requirements needed to regulate the firm and provide the necessary CMP cover.

Download Declaration Document