‘Make Client Money Protection mandatory on agents’ government told
The working group set up by the Department of Communities and Local Government to consider Client Money Protection says the scheme should be made compulsory for all letting agents that handle client money.
Housing minister Gaving Barwell has tweeted that he accepts the findings, and a formal government announcement is expected later today.
The working group was formed last August with a remit to decide on whether it would be appropriate to recommend making CMP mandatory on letting agents in England.
The result of the working group’s deliberations, based on substantial evidence delivered to it during a consultation period, are clear.
It says that the majority of evidence suggested that 85 per cent of interested bodies, including letting agents themselves, were keen to see mandatory CMP.
“This would improve the reputation and professional standards in the industry as well as giving consumers the financial protection that they want and deserve. It would also bring the sector into line with others where client money is held, for example the legal profession and travel operators” said a statement from the group.
“It is presumed that it is those agents that do not have CMP voluntarily that are more likely to abscond with or abuse client money in their custody. Mandatory membership of a CMP scheme would help to drive up standards across the sector” it went on.
The group says that those existing agents failing the due diligence requirement to access CMP cover should not, by definition, be able to continue to handle client money.
In setting out its conclusions, the group says: “The recommendation of the working group is to move forward with the mandating of CMP for agents in England that handle client money. The working group is keen to minimise the impact on the sector and does not want to restrict new firms entering the sector.
“As such, the group does not recommend that membership of a professional body should be a requirement to obtain CMP cover. The group also recommends a transitional implementation to give agents time to become compliant.
“The implementation of mandatory CMP will need good communication and should be in parallel with other changes to this sector to ensure a smooth transition. In particular, successful implementation will depend on robust and effective enforcement of the requirement, to ensure compliance and deter agents who handle client money from not obtaining cover.”
ARLA Propertymark has given a strong welcome to the group’s recommendation.
“We … wholeheartedly agree with their recommendation to mandate CMP for all letting agents. We look forward to the government’s response to Baroness Hayter’s parliamentary question tomorrow afternoon and hope to see the government take forward ARLA Propertymark’s campaign to improve the industry by safeguarding landlord and tenants’ money through mandatory CMP” says David Cox, ARLA chief executive.
Isobel Thomson, chief executive of NALS, says that although it welcomes the recommendation it “carries the risk that CMP from a plethora of sources could further confuse tenants” and instead NALS is advocating SAFEagent as offering a single easily identifiable mark for consumers.