How can you comply with mandatory Client Money Protection? Below we’ve outlined everything you need to know…
- From April 1st 2019, all agents managing lettings in England must be registered with a CMP scheme. This scheme must be an approved government CMP scheme.
- As well as belonging to a CMP scheme, agents must display their CMP certificate in their branch as well as on their website. A copy of the certificate must be issued to anyone who reasonable requires it, free of charge.
- You must notify clients within 14 days, should your CMP scheme be revoked or you change CMP providers.
- Clients must also be notified of your CMP scheme’s name and address of which you are a member of.
- As well as this, you must ensure your level of CMP membership provides sufficient cover to compensate clients for the maximum amount of client money you hold.
What CMP Schemes Can I Join?
At the minute, several CMP schemes have been set up in accordance with the government. We’ve outlined some of these below.
- Complete the online application process and pay the appropriate subscription fee. – https://www.clientmoneyprotect.co.uk/PropertyAgent/JoinNow
- Alternatively request an application form by emailing firstname.lastname@example.org or call 0333 321 9414.
- Up to £500,000 is covered for any one agent
When joining provide CMP, provide them with the following documents:
- The last three months of bank statements from all client accounts.
- A bank letter (if applicable)
- A professional indemnity insurance schedule.
- A summary of deposits protected protected from the tenancy deposit scheme provider (this can be a screen grab).
To join the CMP scheme you will need:
- A separate client account – you must hold client monies in a designated segregated client money account at all times, separate from the business monies.
- You must be a member of a redress scheme (except in Scotland)
- You must maintain professional indemnity insurance in accordance with the CMP minimum professional indemnity requirements. This must also include theft and misappropriation of client monies by employees.
- Hold client monies of up to £500,000. If you hold more, CMP should be contacted.
- Be compliant with CMP’s client money guidelines.
- Agree to adhere to CMP’s Terms and Conditions of membership.
Other benefits of the scheme include:
- Discounted Insurance
- Discounted deposit protection fees with mydeposits tenancy deposit scheme
- Ability to use the CMP logo
- Access to legal helpline
- The scheme costs £180 one-off fee to join the scheme and an annual £340 levy for 2018.
- If you’re a principal, partner or director, you’ll be automatically enrolled to the scheme unless you are part of the RICS (Royal Institute Of Chartered Surveyors Scheme).
- The levy can be paid using a credit/debit card via telephone calling 0161 393 6256, BACS transfer or cheque made payable to “National Federation of Property Professionals”.
- Agents must have a client account set up and provide an Accountants Report or a client money Helathcheck.
- Propertymark are working with The Lettings Partnership to offer an alternative to the annual Accountants Report. Agents can save £750 by completing a Lettings Partnership HealthCheck.
- Agents must have less than £1 million in their client account, not be using a client account service provider (CASP) or a CASP provider themselves and have a year end date of 31st December 2017 or beyond in order to qualify for the HelathCheck at a cost of £250+VAT.
- When landlords sign up to NALS, the NALS Client Money Protection Scheme is automatically assigned unless your part of ARLA, NAEA, RICS or the Law Society. If you’re part of these other organisations, you must contact them for further information on CMP arrangements.
- A limit of £25,000 per claimant is applied to the scheme, landlords are restricted to claiming up to 3 months’ rent. A limit of £300,000 is assigned per case of misappropriation, whilst a £5 million limit is set to cover all compensation payments in any year.
- Landlords can check if their agent is part of the NALS Client Money Protection Scheme by searching here.
Money Shield is a CMP Scheme set up for anyone who isn’t part of ARLA Propertymark. Agents also have the choice to add the Tenancy Deposit Scheme and the Property Ombudsman alongside their CMP registration at an additional cost. To sign up, please click here.
What Happens If I Don’t Join A CMP Scheme?
Should you fail to join a CMP Scheme, a maximum penalty of £30,000 could be issued by the Local Authority. A fine of up £5,000 could be issued to agents who fail to correctly display a certificate of CMP membership on the business premises and on their website.
The information in this blog is believed to be factually accurate at the time of writing the blog, VTUK cannot be held liable for any decisions made based on the contents of this blog.