Agents required to have client money protection from 1st April 2019
The Client Money Protection schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2019 have been approved and take effect as of 1st April 2019.
The new regulations apply to residential property agents operating in the course of English letting agency or property management work (and therefore only apply to England).
For clarity, the term ‘property agent’ covers both a letting agent and property agent, while a property manager engages in property management work (e.g. arranges services, repairs, maintenance, improvements or insurance), but does not include an employee of an agency.
If the agent or property manager receive money which is held on behalf of another person (not including tenancy deposits), they will be known as a “regulated property agent” and so will be required to belong to an approved or designated client money protection scheme from 1st April 2019.
The scheme requirements include the following:-
- A segregated client bank account, authorised by the Financial Conduct Authority
- Three months’ bank statements from client account(s) showing all client money transactions for deposits and rents
- Appropriate professional indemnity insurance for the size of the firm
- Membership of an external consumer redress scheme (which is a legal requirement anyway)
- A membership of a tenancy deposit protection scheme, including a summary of current live protections
The government has issued guidance for letting agents which include a list approved schemes to date. You can view this list here.
If the scheme provides a certificate of membership, the agent must display the certificate at each of their premises, publish a copy of it on their website (if any) and produce a copy to any person who may reasonably require it.
Local authorities are charged with the enforcement of the regulations and may impose a fine of up to a maximum of £30,000 for failure to hold membership of a scheme. A fine of up to £5,000 may be imposed for failure to display the certificate.
If the property agent fails to pay a financial penalty it can be recoverable as if it were an order of the County Court (CCJ).
The term “person” includes directors of companies who can be prosecuted individually for non-compliance.
If you have any questions regarding the new regulations, or if you need advice regarding any residential landlord and tenant issues, contact me directly via philip.oke@GAsolicitors.com or call 01752 203500.