Compulsory Client Money Protection Coming into Force
The government has today published the regulations which were made on 26 February 2018 bringing further provisions from the Housing and Planning Act 2016 into force.
The key provisions which come into force are those relating to Client Money Protection which are commenced as from 19 March 2018.
This does not mean that all agents must have client money protection from 19 March! The provisions that are being commenced allow the secretary of state to make regulations requiring client money protection. However, in order to make those regulations the actual provision must be in force. Given that most regulations appear in April it seems likely that this commencement order is preparing the ground for CMP regulations to be made in April. They may come into force then or, more likely, they will be made then to come fully into force at some later date, probably October
We still know very little about the CMP plans. We know that they apply to letting agents, relocation agents, and property managers in England only and that the provisions will require them to join one of a number of approved CMP schemes. Failure to join will be enforced by financial penalties which will be levied by local authorities.
That’s almost all we know. We have no idea who will be running the schemes, what the penalty will be, or how the system will work.
We can make some assumptions though. It is likely that existing CMP schemes will be authorised. There may well be one or more new schemes appearing, likely run by insurance companies at some level. The penalties will probably look very like the current fixed penalty regime for HMO offences with local authorities levying a penalty of up to £30,000 and this being appealed through the First-Tier Tribunal.
However, we will need to wait for the final regulations. Agents who already have CMP will be pleased that this will level the playing field, while landlords and tenants should be happy that their money enjoys better protection, although surveys show that most of them assume that all agents are signed up to this sort of scheme already! Agents who have not got CMP should probably consider joining a professional body as they are likely to be able to offer better terms on CMP than will be available to agents who cannot demonstrate any training or expertise.