CMP- What is it, how it works and why is it important?

CMP comes from Client Money Protection and it is now a legal requirement for all letting agents
and property managers. Starting with 1st April 2019, the Client Money Protection regulations
require that all the agents engaging in property work should be part of one of the Client Money
Protection schemes which are approved by the government.

CMP is there to protect the consumer; in this case we are talking about the landlords and the
tenants. More specifically, it is in place to safeguard the money the letting agents hold in their
client’s behalf in the event the letting or the managing agent steals or mishandles their client
funds. CMP ensures that the landlord or the tenant is recompensed, if the claim filed is
considered genuine and accepted. Some examples of client money are the following: deposits of
tenants, landlord’s repair funds, rents, service charges and arbitration fees.

The letting agency or agent must become a member of one of approved or designated client
money protection scheme under The Client Money Protection Schemes for Property Agents
(Approval and Designation of Schemes) Regulations 2018. Once they have done that, they will
receive a certificate confirming their membership, which they have to provide free of charge to
anyone who asks. Moreover, the certificate has to be displayed in any office where the agents
deal with their clients and also on any of the agents’ websites, if any. Also, each scheme must
display the members of their scheme in a searchable database on their websites. Alternatively,
the client may ring the schemes directly.

Furthermore, the agents must open and operate a different account in order to keep all the client
money separately from their operating funds. The bank or building society where the account is
open must be authorized by the Financial Conduct Authority.

If the agents fail to comply with any of the things mentioned above, they could face fines up to
£30,000.

Why is it important to choose an agent member of a CMP scheme? There are more valid
reasons, among which it is important to recall that agents who are not members of such scheme
put at risk or may represent a risk for their clients, as the latter may face financial losses.
Therefore the CMP regulations represent a safety net for clients, since they prevent the loss of
hard-won money when they are not at fault. The law it is supposed to guarantee a certain level
of confidence and reassurance for landlords and tenants while their money is in the custody of
an agent.