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ARLA comes out against government-controlled Client Money Protection

The Association of Residential Letting Agents has come out against a single government-administered system for Client Money Protection in the private rental sector.

The official consultation into making CMP mandatory closes this week and ARLA’s response has firmly endorsed the idea of a ‘market led’ system, approved by government but operating independently and privately.

ARLA says it backs that option “on the basis that several CMP schemes already exist, the majority of agents are already members of a CMP scheme and the current regime creates competition in the market.”

It says a single scheme, operated by government, “would stifle competition in the market and may ultimately lead to agents paying a much higher CMP levy than they current are without offering any greater protection or consumers.”

The association says that each approved CMP scheme should report to the Department for Communities and Local Government or a Lead Enforcement Authority with key performance indicators to include the scale of the cover being provided, the number of claims and how many claimants are involved, along with the time taken to process claims. 

“Approved schemes should be insurance-backed to an appropriate level so they can pay out many times more than the income they receive through a CMP levy. Excesses payable by the scheme providers to their insurer in the event of claims should be based on their business models and commercial decisions. However, it is essential that scheme providers report on and demonstrate their ability to meet these excesses in the event of claims being made” says the official ARLA response to the consultation.

The association also suggests that any tenant or landlord wanting to make a CMP claim should be required to report it to the police and request a crime number. “This will ensure that the police do not see the matter as a civil offence when it comes to prosecution and will allow the scheme operators to make claims against the agent under the Proceeds of Crime Act 2002.”


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