The Government has authorised two more firms to provide Client Money Protection (CMP) schemes for letting agents.
From April 1, it is expected to become mandatory for all letting agents and property managers in England to be a member of an approved CMP scheme or face fines and sanctions for non-compliance.
The latest firms to receive authorisation are Money Shield and the National Approved Lettings Scheme.
They join Hamilton Fraser group company Client Money Protect and UKALA.
Money Shield is owned jointly by Propertymark and The Dispute Service and is offered to non ARLA Propertymark members, meaning agents can sign up without having to join the trade body.
It is administered by Propertymark and operated in association with The Property Ombudsman (TPO).
The Money Shield Scheme will cost agents £400 per year.
NALS, a long-time campaigner for mandatory CMP and provider of such as scheme for its members, has also been authorised.
Users of its scheme will have to join NALS.
NALS members get a range of benefits such as a legal helpline, competitive insurance rates and legislative updates.
Signing up involves a £50 plus VAT administration fee and an annual subscription of £145 plus VAT for a single office. Each additional office pays £81, which is inclusive of VAT.
Its annual CMP rates start at £350 plus VAT for firms holding up to £500,000, then £560 for those holding between £500,001 to £1m and £950 plus VAT for amounts of more than £1m.
Isobel Thomson, chief executive of NALS, said: “We’re delighted to have been approved. NALS is a tried and tested CMP scheme, and this means we’re able to continue our work in ensuring a safer private rented sector for consumers.
“While it’s great news that CMP will become a legal requirement from 1 April, it is only one of the elements that make up a professional lettings and management firm. We don’t believe that being part of a CMP scheme should just be a case of buying an off the shelf product to comply with the regulations.
“Any agent coming under our CMP scheme will have to be part of NALS so we can ensure consumers are obtaining the best possible service in all areas and high standards are maintained.”
Comments (3)
Well done the government and all involved with this. Client money protection premiums to insure a principal doesn’t clear off with the clients account [leaving all they built up behind for a figure that has to be a small percentage of the business annual turnover], premiums that are larger than the professional indemnity premiums to insure against a principal’s employee running of with clients cash? Forgive me for saying (I know some of you won’t) but CMP premiums should not logically be higher than PI premiums.
These are artificially high premium that have been created by onerous restrictions on underwriters, that has reduced the number of policy providers to the point where one provider is split in two to provide insurance for what ought to have been their competition.
I am still not convinced for the need for CMP, the majority of owners have no desire or intention of clearing off with client cash, the majority who will be paying these mandatory premiums are honest decent people paying the cost of the rogues and spivs, paying through the nose a premium that’s higher than is commercially ought to be is rubbing salt in their wounds.
If Robert thinks these premiums are high just wait and see how much they will be in 2020 and beyond! If the industry was tightly regulated and audited then I would agree that CMP insurance should be a fairly nominal sum, but neither UKALA, NALS or ARLA carry out annual checks on all their members client funds, and rely upon self-declaration returns which I can tell you from experience are easily fudged. Then there are the agents who are not in any regulatory scheme at all at the moment.
The other problem is that to obtain CMP you need to operate a client fund bank account with “no right of set-off” against your business fund bank account. Hard luck if you bank with Lloyds, it’s refusing to open any client accounts even for existing customers. HSBC is not a much easier road to travel. Given the palaver of opening new bank accounts, and the difficulty of transferring overdraft arrangements if any are in place, I’d strongly recommend any agent without CMP to get down to their bank today.
Let’s hope no-one has got an overdrawn client cash account Ian!