Ombudsman consults over need for client money protection
Tuesday 19th June 2012
The Property Ombudsman is canvassing its members’ views on Client Money Protection insurance.
The TPO does not currently require its member letting agents to hold CMP.
It does, however, require them to have Professional Indemnity insurance, to hold clients’ money in separate accounts and to abide by the TPO’s code of practice.
Bill McClintock, chairman of the TPO operating company, said: “Given that the code of practice is generally accepted as the primary standards document in the industry, the omission of such an important aspect needs to be addressed.
“This is something the board and the Ombudsman, Christopher Hamer, have been considering for some time, and recent incidents of both landlords and tenants suffering financial loss means action on CMP is now imperative.”
The consultation paper sets out various options and points out that members of ARLA, NALS, and RICS are required to have CMP.
McClintock is asking TPO members whether CMP should be made a mandatory requirement, or whether there should be an alternative fall-back position requiring all TPO member firms without CMP to disclose it in writing and actively flag its absence at the point of instruction.
McClintock said: “TPO and its codes of practice are part of a consumer protection regime with the firm objective of raising standards in the industry.
“Whilst TPO cannot force agents to sign up to the code, firms should see the codes as enhancing the reputation of the industry, and for those that are already members of TPO, the addition of a clause requiring CMP will enable them to demonstrate to landlords and tenants that their money is protected.
“TPO is a not-for-profit company and will not itself offer CMP to member firms as a new revenue stream. It is not appropriate for TPO to offer such services but I believe it is appropriate for member firms to have such cover.
“However, members now have the opportunity to express what they think should be the minimum required standard.”
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