Letting and property agents in England must belong to a client money protection scheme by 01 April 2021, when the two-year grace period comes to an end.
It has been mandatory for letting agents in England who hold client money to belong to a client money protection scheme since 1st April 2019.
Letting agencies can be fined up to £30,000, if they do not belong to an approved client money protection scheme, and up to £5,000, if they don’t display their certificate of membership or provide it when asked.
Client money protection schemes protect landlords’ and tenants’ money in the event of theft or misappropriation by agents and ensure that they are compensated. Client money protection also protects landlords’ and tenants’ money should an agency experience financial difficulties – if it was to go into administration, for example.
There are currently six government-approved client money protection schemes – Client Money Protect, Money Shield, Propertymark, RICS, Safeagent (previously NALS), and UKALA Client Money Protection. In order to join a client money protection scheme, agencies will need to hold their clients’ money in an account with a bank or building society authorised by the Financial Conduct Authority. Agencies are also expected to have strong client money handling procedures in place.
Agencies will need to display the certificate confirming their membership of an approved client money protection scheme in a visible location in each of their premises and on their website. It’s also recommended that they publish a copy of their membership certificates on third-party websites and alongside listings on portals. Agents must provide a copy of the certificate from their approved scheme to anyone who reasonably requests it, free of charge.