Property Ombudsman calls on all letting agents to have CMPWritten by: ROSALIND RENSHAW | AUGUST 7...
Property Ombudsman calls on all letting agents to have CMPWritten by: ROSALIND RENSHAW | AUGUST 7, 2014
The Property Ombudsman has again called for all letting agents to have Client Money Protection – and for landlords to actively choose agents with the insurance.
The call comes in the wake of several cases where landlords have lost thousands of pounds in rental income by dealing with agents without cover against their own fraud.
TPO’s support for CMP comes despite the fact that it does not insist on it as a condition of membership, although it does stipulate Professional Indemnity insurance.
It is just over a year since CMP became controversially available to agents through specialist insurance schemes, rather than just being available through trade bodies.
Critics say that CMP should not be available to agents who are, potentially, crooks operating outside any trade or professional body.
Previously, CMP could only be obtained through membership of the likes of ARLA because individual agents could not take out insurance against the possibility of their own fraud.
But 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.
“TPO wholeheartedly supports CMP cover. The more the industry speaks out about this issue to raise awareness the better.”
It is estimated that over £23bn is paid annually in rent, of which £6–£10bn is collected by agents on behalf of landlords.
Around 80% of TPO’s letting agents are reckoned to have CMP, either through membership of a body such as ARLA or NALS or insurance.
Lonsdale Insurance Brokers offers combined Professional Indemnity and CMP in a tie-up with TPO.
Oliver Wharmby, of Lonsdale, said: “Smaller firms may initially question the cost of CMP cover, but all it takes is one rogue employee and innocent directors can find themselves in awful trouble with their landlords and the police.
“Consumer education is key – agents must use their CMP cover as a point of difference over competitors.
“We’re hearing that more landlords are starting to ask the right questions, which is driving more agents to seek cover.
“However, it’s only when every landlord insists their agent offers them CMP protection that we will see a level playing field where CMP is offered by all.”
Another CMP scheme is offered by CM Protect, part of Hamilton Fraser.