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Client Money Protection update

The government consultation on client money protection schemes for lettings agents has now closed.

In summary the government’s response to the consultation is as follows:

  • 63% of respondents agreed that any client money protection (CMP) scheme should be market-led, that is a private scheme which is approved by the government in order to operate. The government has agreed with this option and hopes that it will guarantee that landlords and tenants are protected, regardless of the CMP scheme an agent ultimately chooses.
  • CMP schemes will be required to meet a set of requirements in order to receive approval to ensure that agents have suitable cover. Requirements will include, insurance, a clear claims-handling process, and procedures to ensure that members meet appropriate conditions for handling client money.
  • CMP scheme providers will also need to comply with various conditions during their operation to ensure landlords, tenants and agents receive the same level of service across all providers. Such conditions will include, providing members with a certificate of membership, sharing information with the government so that the effectiveness of the schemes can be checked and sharing data with other providers including tenancy deposit schemes and local authorities for the purposes of enforcement.
  • Agents will be required to be a member of an approved CMP scheme and to take out sufficient cover relevant to the amount of client money they hold. CMP scheme providers will be required to ensure that their members have professional indemnity insurance and segregated client accounts to ensure money is handled correctly.
  • Agents will need to be transparent. This means details of the CMP scheme will need to be displayed. The government intend to use the Tenants Fee Bill to amend the Consumer Rights Act 2015 to require agents to not only display that they have CMP but also the name of their provider. It is important to note that agents will not need to be a member of a separate redress scheme in order to obtain CMP membership.
  • Enforcement will be carried out by local authorities. Fines of up to £30,000 can be imposed on agents. The government believes that it will be disproportionate to see agents subject to a banning order or criminal conviction for failing to obtain CMP membership.

The next steps are now for the government to pass legislation to impose a requirement on agents to join a scheme, make provision for the enforcement of the schemes and approve the scheme providers.


The government has committed to bring forward secondary legislation to implement CMP schemes after Easter recess. They have also stated that they intend to give sufficient notice and a transition period for agents to comply with the scheme.

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