Landlords voice their opinions on client money protection

With all the regulation in the PRS I can't believe CMP is still not compulsory!

As someone who has recently chosen to take out client money protection for our letting business, I need to say that it is not as straightforward as one might think. I've had to move all my business banking away from my bank of 25 years because they do not provide pooled client accounts for the receipt of rent. They will provide a pooled client account for the receipt of security deposits, but not rent. If you want to receive third party client rents then you need one account per landlord. You couldn't make this up! Big name banks that don't allow this include Santander and NatWest. I know this sounds bonkers and I was convinced that they'd made a mistake, but I kid you not!

The banks will obviously have to change their terms if CMP insurance is made compulsory, but it will take time. So, whilst I hope that CMP insurance is made compulsory, I also hope that the implementation of the legislation is given a suitable timescale, otherwise many businesses might struggle to comply.

See Solicitors' Account Rules available on Law Society etc website.

Account 1234: Office account for daily ins and outs such as money belonging to you and outgo fees and so forth.down to your business.

Account 5678: Dedicated Client account for clients' money. If appropriate account 9101 Deposit account for large sums that ought morally if not legally earn 'interest' for the client concerned. (Solicitors must account for bank interest on client money held over a period.) Carry out in-house bookkeeping to keep separate accounts in the global moneypot for each landlord. Carry out monthly audit check and annual formal audit for reporting purposes and peace of mind. Insure that pot against business failure. Essentially, what solicitors must do at depressing expense..

Unlike the few that defile the headlines from time to time, 99.99 recurring% solicitors operate on the mantra 'client money is sacred'.. No reason why responsible letting businesses like Alex Caravello cannot do the same?

Best wishes

Lindsay Keith (Retired Solicitor)

Do landlords ask for a copy of their agent's CMP policy and claim procedure?
Do they request a certificate that their agent is still covered on an annual basis?

If not, then there is not much point.

Hi Lindsay.

I was making the point that getting a client bank account to receive RENT is not as easy as one might think. I just assumed it would be straightforward, but no. The moment you say it is needed to receive rent, many banks want one client account per landlord. This is not feasible (like a pooled client account is) and would make the issue of collecting rents and then passing them on ridiculously time-consuming.

I managed to get a pooled client account in the end, but it meant moving all my business accounts away from my bank of 25 years, together with all the accompanying hassle. Not what I expected!

Another fascinating Property 118 discussion.

I have been trading nearly 30 years as an agent and I do not recall ever being asked by a client about our clients' money protection scheme or what it means. Frankly this is staggering given the amounts of money we hold, especially for landlords of commercial properties. I am not sure if landlords just assume such protection exists or assume we are trustworthy (and competent) and their money is safe whatever.

I am in favour of compulsory CMP. With my landlord's hat on I would not wish to think that any agent I employ could either wilfully or negligently collect my rent and I would not receive it.

It is not difficult to do. My practice is a firm of chartered surveyors so are bound by the relatively stringent RICS guidelines (and we were delighted with an outstanding feedback on our last random audit). Clients money must not go into the office bank account. For the business's peace of mind, never mind the clients'!

We use a high street bank and run a large number of accounts, some general and some discrete. Their arrangements are very good and they have agreed not to pool any business debts with clients' money held (this is very important). All clients' accounts are identified as such to prevent confusion.

I am sorry that some small businesses see this an onerous but it must be for the good of the industry. I was a small business once (just me on day one) but still got appropriate accounts set up. There are too many reported cases of money going missing which gives agents a bad name and unsettles the industry.

I for one vote for compulsory client money protection.

Graham