Compulsory CMP to Come into Force Before Lettings Fee Ban

The Government has announced that compulsory CMP (Client Money Protection) for letting agents will come into force before the lettings fee ban.

However, the Government has officially recognised that the upcoming ban on letting agents charging fees to tenants could cause some agencies to close down.

Bringing compulsory CMP in before the lettings fee ban is to “ensure that client money is not lost” in the instance that an agent goes out of business as a result of the ban.

Agents without CMP could be fined £30,000.

In an announcement early on Easter Sunday, the Government said that regulations would be laid as soon as Parliamentary time allows, requiring agents to have CMP.

At the same time, other regulations will set out of the process by which CMP scheme providers will be chosen.

There were 117 responses to the Government’s consultation last year on compulsory CMP. Most (42%) were from agents, while 22% were from tenants and landlords.

CMP schemes will be approved in a similar way to redress and tenancy deposit protection schemes. However, the legislation will allow the Government to step in and create its own CMP scheme if necessary.

The Government has also made it clear that it will not require agents to belong to a membership body in order to be able to offer CMP.

Enforcement of the compulsory CMP requirement will be by county councils’ Trading Standards, but there could also be enforcement by local housing authorities.

Agents flouting the CMP requirement could face a civil penalty of up to £30,000. However, non-compliance would not be a criminal offence or lead to a banning order.

The Government’s complete response to its consultation on compulsory CMP can be accessed online here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/696038/Client_Money_Protection_response.pdf

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