It is a legal requirement for letting agents to join a Client Money Protection Scheme for the benefit of their clients, typically tenants and landlords, in order to safeguard money they hold on their clients’ behalf. In the event that the owners of the business steal or misappropriate any of this money there is a route of redress against the letting agent by contacting the Scheme and claiming against the Scheme. If a genuine claim is accepted by the Scheme, the Scheme will recompense the landlord or tenant and seek recovery from the letting agent or its owners.
A Client Money Protection scheme 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.