FAQs

AGENTS

Client Money Protection Insurance (CMPI) is a distinct insurance that protects the money of landlords and tenants against theft or misappropriation by the owners of the letting agent whilst it is in their custody or control. These monies are frequently tenant’s deposits and landlord’s rental payments but can also include monies held for repairs and maintenance to the property and other such circumstances. CMPI is purchased by the letting agent for the benefit of his clients (landlord or tenant). In the event of theft or misappropriation of these monies by the owners of the business, landlords and tenants have a route of redress against the letting agent by contacting the ‘policy issuing’ body/organisation and claiming against the policy. If a genuine claim is accepted, the ‘body/organisation’ will recompense the landlord or tenant and seek recovery from the letting agent or its owners.

CMP is a company that provides CMPI to its letting agent members, along the same lines as a trade body, without actually being a trade body. The only benefit provided by CMP to its members is CMPI. CMP provides the ‘financial guarantee’ and purchases insurance to cover its liability to settle claims if one of its members misappropriates client monies. CMP was formed to provide access to this valuable protection without the need to join a trade body. We only provide CMPI and therefore have no ‘Codes of Conduct’ covering all aspects of the letting process, no educational entry requirements, and we undertake no industry lobbying or setting of rules and guidelines. Our only focus is the provision of CMPI to the lettings industry and the transparency and promotion of this important protection to the wider landlord and tenant community. Members of CMP undertake to adhere to the terms and conditions of membership which relate purely to the adequate holding of client monies and the promotion of the CMP membership standards to its clients and customers.

As already stated, it is CMP that provides the ‘financial guarantee’ to pay claims when one of its members misappropriates the client monies. CMP insures its liability to meet this guarantee with an ‘A’ rated global insurer authorised and regulated by the Financial Conduct Authority in the UK.

CMP is operated and administered by HFIS plc T/A Hamilton Fraser Insurance who are the people behind the government approved tenancy deposit schemes my|deposits, my|deposits Scotland and my|deposits Northern Ireland. Therefore you can rest assured that we know all about the protection of client monies, whether this by insurance based or custodial facilities, since 2007. Hamilton Fraser is also, first and foremost, an insurance provider and administers, amongst others, the successful Total Landlord Insurance brand. HFIS plc are authorised and regulated by the Financial Conduct Authority and are part of the Financial Services Compensation Scheme. CM Protect are Introducer Appointed Representatives of HFIS plc and operate a full and transparent complaints procedure and are subject to the same rules and regulations of HFIS plc

The standards that CMP requires of its members are those that surround the handling of client money. It is a requirement of members of CMP that: They hold client monies in a designated segregated client money account at all times that is separate from their own monies They adhere to the Royal Institution of Chartered Surveyors (RICS) client money guidelines They maintain professional indemnity insurance in accordance with the CMP minimum PI requirements They maintain membership of a recognised external redress scheme They agree to adhere to the CMP Terms and Conditions of membership They agree to display the CMP logo in a prominent position within all their lettings branches They agree to provide information to their tenant and landlords clients explaining client money protection and their membership of CMP They agree to allow CMP to display their membership details on the CMP website

In an ideal world, CMPI would never exist because all letting agents would manage monies held by them in an honest and correct way. However, in the real world circumstances change or businesses make poor decisions. Whilst most letting agents operate their businesses in a professional manner, others have no concept of financial controls or do not even understand the difference between client monies and their own. To ensure that letting agents joining CMP understand these differences, and are looking to operate their business in a professional manner from the outset, there are several financial checks that we undertake before we will accept them as a member and provide the CMPI benefit. Joining CMP is not a ‘form-filling’ exercise. We undertake credit and fraud checking references using reputable credit referencing companies; ask for evidence and use of a segregated client account We also ask for evidence of professional indemnity insurance that conforms to CMP’s requirements and all members must also be members of an independent complaints redress scheme such as The PRS We are therefore confident that only the right type of letting agent will become a member of CMP and our guarantee will only be called into operation for the unexpected situation.

Applying for membership of CMP is a simple three stage process. 1. You must complete an application form and submit to CMP together with evidence of your segregated client money account, professional indemnity insurance and membership details of your external redress scheme. 2. Once received, CMP will undertake various credit references on the firm and where applicable the directors and shareholders. 3. If you pass our requirements in Stage One and Two, the firm must then undertake our ‘Client Money questionnaire’ to ensure that the client account is being used correctly and that sufficient funds are held in the account to cover the client money liabilities of the firm.

Unfortunately if you already hold CMPI through a Trade Body/ organisation or else where we are unable to accept your membership application to CMP

The cost of membership of CMP starts from £350.00 plus VAT a year. This fee is payable when first applying to join CMP, we do not currently offer payment plans although we are looking at introducing a direct debit offering in the future. The fee covers 12 months of Membership starting from the date all three stages have been successfully completed and membership confirmed in writing.

Memberships will need to be renewed yearly, credit and fraud references undertaken and renewal fee paid for on each anniversary date of membership. What is the law surrounding Client Money Protection Insurance? CMPI is not yet compulsory in the UK for letting agents, it is now widely recognised within the property industry that this type of protection is the very minimum requirement for a well-run and professional agent. However on 27th May 2015 it became mandatory for all letting agents to display their client money protection status whether they hold it or not.

Complaints can only be made about the process or service provided by CMP. The majority of complaints will be dealt with within 5 workings days. Please see the CMP Complaints Procedure.

LANDLORDS & TENANTS

Traditionally, the provision of CMP has been made available through letting agent trade bodies or organisations such as RICS, ARLA, UKALA or NALS. These organisations provide CMP to their members, publicise the benefits to the wider community, and deal with any claims made against the scheme. Without the inclusion of this independent entity within the CMP sale process, the landlord and tenant risks not knowing about the existence of CMP, the terms and conditions of the insurance, who to contact and how to make a claim – especially if the agent has gone into liquidation and is un-contactable.

You can call us on 0333 321 9414 or check our members list here on our website

No, CMP does not act on behalf of the letting agent. It is an independent membership body that provides the protection of client money whilst held by its members and the Scheme insures its liability for the payment of any claims

CMP does not offer a ‘for whatever reason’ guarantee. The guarantee extends only to loss by theft of client monies by the principle or owners of the business. For the purpose of doubt, theft means the dishonest obtaining of money with the intention of permanently depriving the client of such money. When considering whether a claim under the guarantee is valid or not, CMP will need to ascertain whether theft of client monies, and therefore a crime, has taken place. CMP will not accept claims where the agent merely refuses to return monies and those monies are clearly still in the custody and control of the agent.

The financial guarantee provided by CMP is limited to the insurance we have purchased. This is the same for all CMPI schemes, although this fact is not always made as transparent as it should be. As with all insurance protection there must be limits put in place and our job as risk takers is to manage these limits. Using our knowledge of the lettings market and our experience of operating similar CMPI schemes in the tenancy deposit world, we feel that the limits of our guarantee are adequate to meet the claims of those landlords and tenants we seek to protect. The limits are: - £500,000 any one loss/incident - £25,000 any one landlord/tenant - £5,000,000 in the aggregate per 12 month period of the guarantee.

The main exclusions are as follows: 1. Theft of client monies by an employee of the business. CMPI is designed to protect clients from theft of money by the owner of the business. Theft of client monies by an employee of the business is still the responsibility of the employer and therefore it is the responsibility of the employer to protect the business against this type of risk. CMP requires all its members to hold Professional Indemnity Insurance that will pick up this type of theft. Landlords and tenants will be directed to make a claim against the letting agents’ PI policy. 2. Theft of monies by the owner owed to another owner. CMP will not pick up any claims where one business owner misappropriates monies owed to another owner. 3. Theft of monies by a third party. CMP will not honour any claim where theft of client monies is undertaken by any person not connected with the letting agent. For example, monies held by tradesmen, financial institutions or other businesses. 4. Theft of monies already protected/held by an authorised Tenancy Deposit Protection Scheme. CMP will not pick up claims which relate to tenant’s deposits that are protected by a government authorised tenancy deposit protection scheme, whether the scheme is a custodial scheme or insured-based scheme. CMP will only honour claims if the deposit schemes’ Membership Rules are exhausted or not applicable e.g. the deposit was never protected or the scheme cannot or will not honour the protection of the deposit. If the deposit is clearly protected, or held in a custodial scheme, the claimant will be directed back to the relevant deposit protection scheme. CMP will not accept claims from an authorised Tenancy Deposit Protection scheme to offset its liability.

Complaints can only be made about the process or service provided by CMP. The majority of complaints will be dealt with within 5 workings days. Please see the CMP Complaints Procedure.