All letting agents will be able to get Client Money Protection for the first time, whether they are a member of a recognised trade body of association or not.
Hence, landlords and tenants will not compulsorily have to look for a member of, for instance, ARLA, NALS or RICS, to make certain that their money will be secure.
This week, a new company named CM Protect was launched. While they have a status of a company, this is simply to be able to offer the insurance at all, individual agents aren’t allowed to take out their own insurance against the possibility that they might go bankrupt, misuse or run off with the clients’ money.
The company has been created by the very same management team behind insurers Total Landlord Insurance and tenancy deposit scheme Mydeposits.
The single reason is to provide Client Money Protection insurance to letting agents who aren’t members of a recognised trade body or association but wish to act responsibly.
Previously, belonging to one of these bodies was the only way for clients of letting agents to gain from such protection.
CMP insurance protects the money of landlords and tenants against theft or embezzlement by the owners of a letting agent whilst it is in their custody or control. This could involve tenants’ deposits and landlords’ rental payments, or funds held for repairs and maintenance to a property.
Reports of lettings agents starting up on the back of a badly functioning sales sector and then folding, taking all of their clients’ money with them, has had a harmful effect on responsible independent and smaller letting agents.
Eddie Hooker, chief executive of CM Protect Ltd, said, “There are many reasons why a letting agent does not feel it should be a member of an industry trade body, such as educational obligations, but they should not be prevented from accessing this valuable protection which demonstrates an upholding of responsibility to clients and provides the reassurance of a well-run professional agency.”
Ian Langley, pictured, director of operations for CM Protect, said, “We do not wish to compete with the industry trade bodies as we recognise the importance and value of these in raising standards and would always encourage larger agents in particular to uphold this.
“However, we feel that there is a void in the market and we want to encourage those smaller agents, who are currently not protected by CMP, to act responsibly without having to take on the commitment of a trade body.”
CMP insurance must be provided by a body or organisation that is independent from the letting agent.
For this reason, CM Protect is setting up itself as a ‘membership’ body, yet without ‘codes of conduct’ or other requirements. The benefit of CMP is only available to letting agents whilst they remain a member.
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