What is Client Money Protection (CMP)?

Since April 2019, all property agents in England have been required to belong to a Government-approved CMP scheme—or risk a £30,000 fine. Before the law was introduced, it was estimated that around 60–80 per cent of agents had voluntarily joined a CMP scheme, and it has long been a requirement for all our members to have CMP.

How does Client Money Protection work?

Client Money Protection (CMP) is a reimbursement scheme from which landlords and tenants can claim for lost deposits or rent should an agent misappropriate client money. In simple terms, it means your money is protected should an agent unexpectedly go bust or commit theft.

If you can prove an agent has misappropriated your funds, you’ll be able to make a claim without the need to go through the courts to get your money back. Firstly, report the missing money to the police then make a claim to the agent’s CMP provider within 12 months. You’ll usually be asked to provide the following supporting documentation as evidence:

• Tenancy agreement
• Terms of Business 
• Bank statements illustrating a pattern of payments followed by non-payment
• The tenant’s bank statements illustrating rental payments have been made

True crime
Every year, unprotected landlords and tenants lose money when funds are misappropriated. Rogue letting agent Manish Manek was found guilty of 17 counts of theft involving rent owed to landlords. He stole £47,000 before fleeing the UK in October 2012. A police investigation found that he had been putting tenant deposits and rent into his personal account. He was finally arrested and sentenced to jail but his victims never saw their money returned. 

Our campaign
We worked closely with the Ministry of Housing, Communities and Local Government (MHCLG) and led a successful campaign for the introduction of mandatory CMP for all letting agents. Elsewhere in the UK, agents in Wales must have CMP as part of the Rent Smart Wales initiative and Scotland introduced CMP as a legal requirement in January 2018.

What does Client Money Protection cover?

A landlord's repair funds, rent, service charges and arbitration fees are all covered by CMP. If a tenant pays a deposit, it must be protected in a Tenancy Deposit Protection (TDP) scheme so the money is safe during that period.

Due to the existing TDP law, the new CMP legislation only needs to cover a deposit whilst it is with the agent, i.e. before or after it’s with the TDP scheme. Agents who don’t handle client money, (e.g. when rent is paid directly to the landlord) will still be able to trade without CMP. 

Government-approved CMP schemes

Whilst it is compulsory for all agents handling client money to have CMP, rogue operators do still exist. Before handing over any money or confirming an agreement with a property agent, look for their CMP certificate and clarify with the company who provides the cover. Agencies must display their CMP certificate in branch and on their website.

Our Propertymark CMP scheme is one of the approved schemes and we inspect our members' accounts annually. We will reimburse landlords and tenants up to a total of £15 million per year if the agent is part of our main scheme, or £35 million per year if they are part of our large corporate scheme. There is a maximum award of £50,000 per individual claim. A list of other organisations offering an approved CMP scheme can be found here.

---

Find your local ARLA Propertymark Protected expert

Propertymark ensure all their member agencies that handle client money are backed by a government-approved CMP scheme so you and your money are safeguarded. By using a Propertymark member you are guaranteed to be consulting with a professional agent who will give you up-to-date advice and guidance.