Please Note: This Article is 8 years old. This increases the likelihood that some or all of it's content is now outdated.

The Property Ombudsman (TPO) under their new code of practice for letting agents has backed the idea that agents offer client money protection (CMP) insurance and says that landlords should seek the greatest protection rather than the cheapest fee when choosing a letting agent.

TPO’s support for Client Money Protection (CMP) coincides with the forthcoming requirement that all letting agents join a redress scheme by October this year and comes almost a year after insurance cover became available to the lettings industry through their trade bodies and insurance brokers.

Calls for letting agents to offer CMP, now backed by TPO scheme, come after several high-profile cases where landlords have lost thousands of pounds in rental income when the agent they had been using had insufficient cover to protect their money when the agent became insolvent or fraud was involved.

Agents should always use a completely separate client account from their business accounts to effectively “ring fence” and protect their landlord’s rent (and their tenant’s rent deposit) monies.

However, it is well known in the industry that many agents, particularly those operating on the fringes of legality, often use client money as working capital rather than keeping it protected. It’s perhaps inevitable that when an agent is short of funds, and having an account under their control with thousands of pounds of client money in it, it is rather too tempting for them to resist using it.

The Code of Practice, along with a new one for Estate Agents, became effective from 1st August 2014 and reflects the developments in industry practice and recent legislative changes affecting both consumers and agents.

Gerry Fitzjohn, Chief Operating Officer of TPO said:

“As the UK’s largest property redress scheme, it’s truly upsetting to hear of cases where landlords have lost thousands of pounds in rent paid to an agent that has been used unlawfully and cannot be recovered because the agent did not have CMP cover in place.

“Rather than choose to use an agent that charges the lowest fee, landlords must ask if the agent has a CMP policy in place to protect their rental income.

“Within the industry, thousands of agents are already CMP protected but there are still a number of firms that are unaware of the scale of protection it offers. A TPO survey even revealed that some agents wrongly thought CMP duplicated the deposit protection schemes when that simply isn’t the case.

“With more people renting now than ever before, landlords and agents need to understand that CMP provides the guaranteed assurance that the rent collected by CMP protected agents is covered against fraud and unlawful use.

According to the TPO, more than £23 billion is paid annually in rent, of which £6 – £10 billion is collected by agents on behalf of landlords. With 80% of TPO’s letting agents understood to have CMP cover through their trade body or an independent insurance broker, landlords are being urged to ask their letting agent if has CMP cover to protect the landlord’s rental income.

Susie Crolla, CEO of the Guild of Letting & Management, extended her support by saying:

“I feel it is important that we demonstrate best practice in everything that we do; even when there is as yet no legal requirement for us to do so. From 1 October 2014, therefore, being registered with TPO and having CMP cover will become a mandatory condition of membership for The Guild Subscription.

“While many members of The Guild are already registered and covered, this decision is an important step akin to an ‘outward sign of inward grace’. It sends a message to our stakeholders that we are serious about adopting the highest standards of professionalism and integrity as an organisation that is progressive and can be trusted.”

Please Note: This Article is 8 years old. This increases the likelihood that some or all of it's content is now outdated.


  1. We are currently representing a single landlord who owns all five of the tenancies that we administer on their behalf. We are mainly in business as a firm of architectural consultants but we have \’inherited\’ these tenancies from one particular client, who we do not want to loose.

    We would be obliged to receive your comments particularly about
    1) should we continue as \’landlords agents\’ and thus have to comply with the up-coming extra problems as outlined in your articles
    or 2) should we become \’landlords\’ in our own right and allow the requirements of the latest requirements to pass us by – as we would no longer be landlords agents?

    We already comply with all the requirement of the tenancy laws including My|deposits (we are registered deposit holders with My|Deposits and we renew each year at some cost) and their tenant-biased system of \’arbitration\’ and all the other requirements of being a landlord agent – it\’s just yet another inconvenience that we would rather avoid if possible.

    We are currently not a member of a trade association connected to the renting industry. We do hold PI insurance. Do you think we should be looking for some CMP insurance as well – if so could you recommend anyone in particular please?

    Your comments would be appreciated.

    Many thanks

    Barry Noon DipArch (Hons)


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