EYE is putting its weight behind moves to make Client Money Protection insurance compulsory for all letting agents.
To enable the residential property industry to show its support for the measure, Nick Salmon, managing director of Property Industry Eye, has launched an online petition on the UK Parliament website.
The residential property industry often receives unfair criticism and coverage from the media. The petition is an ideal opportunity for the industry to redress the balance and to openly demonstrate that it cares about the consumer and cares about professionalism.
And of course, if all agents are required to have CMP in place, the playing field is levelled.
An amendment to the Housing Bill 2015 is being proposed that will make CMP compulsory but it is vital that politicians are made aware of the strength of feeling regarding the measure, otherwise they may not back it.
That’s why this petition is so important. At 10,000 signatures, government will respond to the petition. At 100,000 signatures, the petition will be considered for debate in Parliament.
We urge you to sign the petition and to bring it to the attention of as many of your friends and colleagues as possible so that they can sign up too.
The petition ‘Make Client Money Protection compulsory for all letting agents’ is here:
Comments (46)
No! – There is no need for “when we steal your money insurance”.
Always remember to ask your agent how safe there “When we steal your money” Insurance policy is?
We should always remember it is insurance and as such insurance companies put £ limits and limits on number of months and may not pay out if the Letting Agent fails to pay.
The unfortunate fact is that this insurance is useless to most landlords, it is though a benefit to the minority of landlords that go to a bad agent that plans to steal your rents. The majority pay, the minority benefit (if the policy covers them).
Rather than insurance – that may or may not protect you when you meet the claim conditions. It’d be better to legislate to ensure an agent that releases funds within 48 hours. Why an agent would need to hold funds longer than that is beyond me? its your rent, they are not allowed to hold deposits no more.
You could then proceed to obtain the “original insurance” from business owners that hold your monies for a short period. That is a Personal Guarantee – you try and steal my rents and im coming after your home and assets. Much better than T&C and Limits of a 3rd party’s insurer.
Property Redress Scheme is operated by an insurance company? I think they have offered CMP for a long time now. SafeAgent remains a logo limited to a select few bureaucratic schemes unfortunately, perhaps some day it will offer standard industry kite-mark .
SafeAgent will of course push towards further regulation, it is operated by the bureaucratic schemes – a logo that is quoted as wanting all landlords to be regulated.. I ponder why £.
Its certainly a nice way to keep new entrants out of the market, keep increasing the cost of entry for innovative letting agents.
Higher insurance policies for those young potential entrepreneurs due to risk flags, a good way to sure up the big agents prevent new entrants or force them under franchises to meet those new regulatory conditions.
Landlords with good yields of course should not be worried about there agents margins coming under scrutiny; as they may be able to cover the increase costs out of there margins if not by increasing rent.
They should worry about regulating out new entrants to the market, Competition is key to any sector. Allow the big companies to evolve a monopoly through regulation and costs. Then we have little to no power to change and negotiate.
I take the view that regulation is a form of protectionism and it tends to benefit regulated industries at the expense of consumers. Not to mention the added cost of complying with regulation that is passed to consumers. It prevents new entrants and stifles innovation and fosters a “me too” industry.
Its rather suppressing that business owners such as landlords would ever want government intervention to introduce “When we steal your money” Insurance policy. When they can do so when choosing and instructing an agent?
The big agents already have CMP? Why not use them rather than an agent that does not.
Does having CMP make you a good agent? Can an agent be good yet not have CMP?
This here is the evolution of the nanny state, entering business to business contracts. Its the best route to force landlords to regulate themselves, how can agents be regulated but landlords not.
Robert, if your aware of accounts that don’t tally by a long way. Have you officially raised this? You should be completing a SAR if you feel its a rogue property trader.
SAR Trevor? I’m not aware of any obligations on me to clear up behind ARLA or RICS auditors.
That’s a legitimate goal Robert so long as the trade body involvement is purely administrative. If it means that to use such CMP the firms/individuals would have to become members of that trade body I would fully expect the government to turn round and say that such a requirement creates a bar to entry and they will not support it.
Long, long, before the very fist mention of skulduggery, rogues or CMP a very forward group of people in Cornwall thought all of this through to such an extent the vocabulary put into the system has now become part of everyday jargon within the industry.
The processes, the mechanics are all in place for a fully automated system of audit, there are no restrictive barriers to entry other than the requirement to run a client cash accounting system to a minimum standard.
The real frustration I have is the system has been sat there since 2004 ready to be turned on yet as soon as I mention things I have thought through, programmed and developed for this very purpose I am painted as a casting negativity on the part plans of others.
For nothing I will advise you the biggest barrier to implementation will come from outwardly respectable agencies who quietly have issues with their CCA and are currently being helped through a difficult time.
Robert – I believe your essence of your points may be valid but you are trying to say that in pressing for compulsory CMP the whole scheme must be fully formed first. The nuts and bolts of implementation and what may or may not be required of agents, trade bodies, insurers and accountants is something to be sorted out in a process of consultation once the amendment is accepted by Parliament. What we are pressing for here is the principle of compulsory CMP. And it should also be noted that the opportunity to do this within a piece of primary legislation is unlikely to come round again any time soon.
Sorry Nick- I am not saying it must be fully formed I am asking that CMP is compulsory but only available through an approved trade body.
Allowing CMP policies to be sold to any unregulated Joe Blow who has no obligation to present reconciled, to the physical bank account, ledgers for independent audit is an elephant in the room that can not be ignored even at this early stage.
INEA has signed in support today
How many INEA client cash accounts are £0.01 perfect Trevor? By penny perfect I mean that, they reconcile to the penny with no spreadsheet correctors and no balancing suspense account?
You of all people ought to understand that legislation has to be properly considered and not just a popular good idea. It took 7 years to case law resolve issues in DPS Yvette Cooper and CLG knew where ambiguous in March 2007.
Right now I know of an account £500,000 short , another £300,000+, one of them has a royal flush of professional affiliations. No insurer is going to underwrite risks that existed before the policy was taken out
I think an ABTA style insurance scheme is a solid idea but it has to provide a means to distinguish the rogues no matter how many or how few windows stickers they can display
Of coarse INEA have. They have an £ interest in increased regulation.
We can look for all types of solutions to problems, however in this instance, is the answer simpler? Do we not need to operate in a transparent manner, which allows tenants, agents and landlords to all be able to see what is happening with their monies? Then there are three people policing the process, all with a vested interest in the process.
OK Shawn Payprop. Please could you spell out exactly how such a system could possibly work in practical terms?
All of that already exists and has done for years and years and years, 23 to be exact. The CFP DOS APM system did all of that in 1992.
Robert If that has all been in place since 1992 and we still have the problem, then clearly this does not solve the problem. In the words of Albert Einstein Insanity: doing the same thing over and over again and expecting different results. We have to try something different.
Romain – If you want to get the attention of politicians and civil servants the word ‘consumer’ is one of the most useful in the dictionary.
Bravo for setting up the petition. How about one for the Welsh Agents licence fee’s and before anyone says it only applies to Wales err look a little further and you will see that the Welsh Housing Minister (labour dominated quango) has said this is the blue print for all the UK. Labour tried to get licencing in several times in 2014 at Westminster but were defeated. One day they may just back in power and then you’ll all be seething for not supporting the Welsh agents now. Corbin is a prime candidate to support it (hope they don’t get him to resign, he’s best news not to get them back into power). I’m not against the licensing although I do have reservations as dishonesty is a mind set, as time has proved there are enough dishonest licenced people around. It is the fee charges we all need to get behind.
I find the insistence of referring to ‘consumers’ instead of landlords or clients rather interesting and slightly condescending.
Good to see you leading the way Eric. Thank you.
It’s worth noting that the campaign to have compulsory CMP is supported by ARLA, Shelter, NALS, RICS, NAEA, National Landlords Association, Residential Landlords Association, SAFEagent, The Property Ombudsman and Ombudsman Services.
Today is my 21st birthday in the industry. Through selling, installing and training APM for 7 years. Directing CFPwinMan for 9, being consultant to Jupix and on going others it is reasonable for me to claim I know what I am talking about when it comes to handling client cash. Compulsory CMP without compulsory, stringent audit is worthless. It’s like handy a Fox a convincing Chicken suit and letting them run amok in the hen house
It is certainly worth noting, that those agencies that will directly benefit from increased regulation and being able to sell there advice and insurance as ARLA, NALS, RICS, NAEA, National Landlords Association, Residential Landlords Association, SAFEagent, The Property Ombudsman and Ombudsman Services.
Shelter wont benefit from the higher costs, but there logic is flawed. Its thoroughly an anti-landlord lobby origination.
I think if you ask most of those listed; CMP is not far enough. They want a fully regulated industry right?
I know SafeAgent and its backers also want Landlords to be Regulated, never mind agents.
Given the number of times people moan about there being no leadership in the property industry; how the Press denigrate and slag off estate agents; and how no-one ever counters it I am surprised that the secondary but really useful part of this is being missed. If the industry is seen to be putting self-interest to one side in favour of backing something that broadly enhances consumer protection, it will help to redress the negative coverage. Yes, we can debate and discuss the nitty gritty of how the technicalties would work but the key thing about the petition, it seems to me, is to get the message across that the property industry can pull together for a laudable end result. Yes? No?
Spot on. As Edmund Burke said “The only thing necessary for the triumph of evil is for good men to do nothing.” Let’s show the UK that we agents care about the consumer and follow the lead set by SAFEagent.
“broadly enhances consumer protection” what consumer?
I am a strong advocate for CMP, and I agree with Eric this is something that is not wildly promoted within the industry and especially by ARLA our so called industry spokesman.
It is important that the general public are made aware and choose agents that comply with all legislation to offer both their landlord clients and the tenants they rent to peace of mind and eradicate the industry of the rouge element of our profession.
To a degree ARLA is stopping this by insisting that any agent wishing to be a member must use their appointed provider ( monopoly) even though HMG recommend using a different Scheme in their how to rent guide.
If its good enough for HMG to recommend why is it not good enough for ARLA?
Alienating agents from becoming members even after going through their rigorous training and exam procedures just weakens their position.
I think the status quo works just fine: there are CMP schemes that letting agents can join and advertise.
Landlords can make an informed decision and decide for themselves which agent they want to hire.
Romain – one of the key issues is lack of consumer awareness. How many Landlords realise that in the event an agent misappropriates a tenants deposit, it is they, the Landlord, who must repay it and possible far more in the event the agent failed to protect it. I have had to break this news to many landlords and they are totally gobsmacked and disbelieving as they had wrongly assumed it was the agents liability.
I fully agree that too many landlords are not aware of this. This does not justify over-reacting by legislating.
In fact, I am guessing that you breaking the news to them is a good way to earn their business.
Why are you not advocating personal guarantees? rather than a 3rd party insurer with its terms and conditions and limits.
If someone steals deposit? will that even be covered or is it just rent.
The “incase i steel your money insurance” you want everyone to pay, but only a few will benefit. Who? Those that choose a dodgy agent over price compared to those that pay a premium .
Your still in favor of full regulation of Landlords and Letting Agents Eric? never-mind the requirement just for agents to have CMP.
I couldn’t disagree more. Many Landlords believe that there is some form of regulation or protection in place and tenants, particularly in London assume that there is some form of minimum standard or supervision. There is not – its a viper’s nest and its no surprise that sales and letting agents are held in such low regard – because the standards are so poor. Its the only industry I know where you can be working on the fish counter at Tesco and next day set up as an estate agent selling someone’s most valuable asset, advising them on Landlord & Tenant law and handling £thousands in rent and deposits. Have to register with a redress scheme? Don’t make me laugh! Many don’t even bother. A complete and utter farce.
I meant this as a response to Romain’s post which said –
“I think the status quo works just fine: there are CMP schemes that letting agents can join and advertise.
Landlords can make an informed decision and decide for themselves which agent they want to hire”
SAFEagent is a campaign to make CMP compulsory and to signpost which agents protect money and those which do not. This is a key building block in restoring confidence in the industry and to protect consumers in the absence of successive Governments refusal to regulate the industry. Lots of MP’s call for regulation, but ironically only Parliament can introduce legislation yet choose not to. It is time for industry to stand up and support this and join the 3000+ Safeagents who have done so much to promote this. It’s not a panacea – it’s a start. I fail to understand why anyone would object to any initiative to help protect consumers.
Cost, paperwork, feeling like you are being brought down to the lowest common denominator, the need to sign up to a regulatory body you do not believe in. – Not saying i agree with any of these but that is probably why some are resistant.
Going slightly off topic i note Eric that you would be in favor of regulation. Could i ask why? We have enough rules within the industry some agents just do not follow them.
Ideally, I am in favour of regulation. That said, there is little point until existing regs & Laws are policed. The consumer enforcers need legislation to be able to take action and whilst this has been ineffective to date, there is a change coming now TSI get to retain fines to allow them to improve resources. A framework needs to be in place but the key is consumer awareness. If agents and organisations work together, we can go a long way to achieving this by starving the minority of business. On a commercial note, flying the flag for consumer protection can only be a good thing.
It is just a logo and a prime example of protectionism – agents with better CMP than Northwood are not able to join unless they sign up to the bureaucratic schemes that founded it.
You are not “safe” with “safeagent” each and every member has their own CMP (if they paid for it the months leading up to collapse that is) which has Terms and Conditions, has a limit they will pay you personally and a total limit for the company – feeling safe?
SafeAgent is just a logo – designed as Eric says to “starve unregulated agents” because they can charge less; if they are not part of voluntary regulator ARLA.
Give us a proper signpost; without the protectionism Eric.
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Why anyone would object to CMP, I wrote a comprehensive reply. One think that was omited from it though is that it is disproportionate cost for such a minuscule problem. There is no evidence that letting agents are running of with peoples money.
Moreover; landlords have free choice to use one with CMP or Not.
They are also negotiating a B2B contract with a supplier, both being business. (No landlords are not consumers). As such they can put assets owned by the company under risk or obtain personal guarantee from the agent themselves.
Best thing about personal guarantees? not limited by the T&C of a CMP policy.
I resent this policy and my need to a member of an Ombudsman Scheme. I would prefer a minimum level of competence in the industry first delivered through a Robust trade body like ARLA or RICS and then if we must have extras – let this fluff be bolt ons. Those of us that have no intention of dipping into our client accounts this policy is very expensive, but for those criminals whose business plan is to steal money from their clients – this is mega cheap.
With respect Anthony, so long as agency is unregulated and crooks cease to exist your statements are idealistic.
Okay i will raise my hand and make myself look the class fool.
I deal in sales not letting but looking at lettings next year. Where do you get CMP what are the requirements and what are the costs?
there used to be a policy advertised on LAT, from memory £99
Smile – try: http://www.hamiltonfraser.co.uk/
They are involved with the third redress scheme and MyDeposits. They also provide CMP, worth checking with the others.
Thanks guys will check it out.
Sorry to be the little boy at the back of the crowd but although I fully support CMP, I believe it should only be available through regulating governing bodies, ARLA, RICS or the Law Society.
If CMP becomes compulsory but available to purchase without the stop check of mandatory auditing via a professional body, CMP becomes a self certification system that camouflages the rogues in with the honest.
Crooks, incompetents and the easily tempted will all too easily be able to fund the protection (out of clients’ money) so the real benefit of compulsory CMP will be lost; a 3rd party set of eyes looking at the client cash account and making sure it reconciles.
Robert, there is NAILS and Safe Agent as well as the others you mention. Agree that there should be checks in place, not just a stand alone insurance policy.
Nals is a consumer protection organisation not a regulator, Safe Agent is the campaigning group, not a regulator.
All I am asking is that the issuing insurer audits the Client cash account and sees it reconciles other wise it becomes a policy to protect the insured rather than clients suffering loss.
With respect you have to file an accountants report for NALS the same as one does for ARLA. I think you will find they are very much the same style of organisations, the only difference, one gets on with it the other is pompous.
That’s strange. Isobel Thompson says NALS is a consumer protection scheme not a regulator. It doesn’t worry me if NALS is the single supplier of CMP as long as rogues aren’t allowed to go knocking up spreadsheets to mirror the physical bank account just to pass audit