Compulsory Client Money Protection has been recommended for all letting agents in England in a Parliamentary review.
The industry has strongly campaigned for just this – but, in a twist, the trade bodies could lose out in terms of their recruitment.
Yesterday, it was announced – via Baroness Hayter’s Twitter account – that ministers are accepting the recommendation. Housing minister Gavin Barwell also announced via Twitter “We’re accepting these recommendations”. He later said: “Today we confirmed we’ll require all agent to protect the client money they handle. Will consult shortly on details.”
A change in the law now looks certain, making CMP a legal requirement – almost certainly via an ‘enabling’ amendment to the Housing and Planning Act.
The review was led by Baroness Hayter and Lord Palmer.
Acceptance of its recommendations now suggest that in future letting agents will not be able to take money from the public unless they have CMP.
The recommendation suggests that letting agents should be able to obtain the insurance without necessarily having to belong to a membership body, such as ARLA or NALS. This would be a reverse of the current situation.
Yesterday evening, Baroness Hayter’s Twitter account said: “We have just heard that ministers will ACCEPT our Client Money Protection for Letting Agents report. Result!”
David Cox, chief executive of ARLA Propertymark, did not refer to ministerial approval, but said: “We welcome the review of CMP undertaken by Baroness Hayter and Lord Palmer, and 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 this 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.”
Glynis Frew of Hunters, acting chair of the SAFEagent steering group, said: “We’re delighted with the outcome of the review which calls for mandatory CMP for all letting agents.
“We’ve campaigned long and hard for this and fully endorse the recommendation that implementation is now necessary.
“However, for agents to be eligible to display the SAFEagent logo it also means that they are part of an agent regulatory organisation.
“We believe that is the cornerstone for the delivery of a safe, professional private rented sector giving tenants and landlords the level of financial protection and service they deserve.
“It is now time for the Government to act on the review’s recommendations and we look forward to working with them to deliver this long overdue consumer protection measure.
“We’d like to give our thanks and credit to the agents who signed up to the SAFEagent campaign and still continue to be part of it in its sixth year, as we receive this ringing endorsement of the need for mandatory CMP from the review panel.
“As the implementation date is still unknown, the SAFEagent campaign will continue with SAFEagent Awareness Week taking place in the week of May 15 to 19, and we would urge as many agents as possible to support this campaign.”
Isobel Thomson, CEO of NALS, said: “There is now clear support across the private-rented sector for mandatory Client Money Protection and we fully endorse the review’s findings that a coherent implementation is now necessary.
“The review concludes that agents will not have to source their CMP from agent professional bodies, but this carries the risk that CMP from a plethora of sources could further confuse tenants.
“That is why NALS has always supported the SAFEagent campaign which offers a single easily identifiable mark for consumers.
“We are in real danger of a ‘piecemeal’ approach if mandatory CMP regulations are not considered alongside the forthcoming ban on letting agent fees.
“Both proposals will have a significant impact on the market, so we need the Government to be thinking in the interests of all in the sector – landlords, agents and tenants – before they act and set it within a framework of regulation for all agents.”