As most Landlords know, tenants' deposits must be held in one of the three government approved schemes. I had hitherto assumed that this legislation was good and protected all concerned. However, the TDS and mydeposits are non-custodial. They only protect the tenant, but not the landlord. If an LA registers deposits with either the TDS or mydeposits, then runs off with the money, the landlord becomes liable to the tenant. TDS and mydeposits will only pay out if both the LA and landlord go bust. My friend used an LA who recently sold their business, which was a franchise of a very major name in Estate Agency, to a third party. The seller and third-party are both stating that each other has the bank account with the deposits in. A total of £38,000 has gone missing and solicitors have been employed. Nonetheless, my friend has to pay the tenants' deposits back out of his own pocket. The legal situation is complex and he and his fellow landlords may well lose all their deposits. Apparently, it is not an uncommon situation. My advice would be to place deposits with the DPS as it is the only custodial scheme. I have absolutely no relationship with the DPS, but have been astounded by the situation my friend has found himself in.