The Association of Residential Managing Agents has launched a first-of-its-kind Client Money Protection to members.
Although CMP schemes are to be mandatory for letting agents from April next year, they are not yet compulsory for managing agents.
However ARMA says that given the sums held by property managers are significantly larger than those held by lettings agents, the need for client protection is all the more pressing.
It says that on average, property managers hold £6.2m in leaseholder money and larger firms could be holding in excess of £100m, whereas the average letting agency holds around £500,000 at any one time.
Money held is made up of clients’ service charges and reserve and sinking funds, all held in trust in individual client accounts.
ARMA says it believes 40 per cent of all managing agents have no CMP in place, meaning that money would not be insured should theft or misappropriation take place.
Its new policy is specifically for the block management sector and is offered through NFU Mutual, underwritten by multinational insurance group RSA.
“The current CMP schemes are not designed to offer the level of protection required within our sector … We want all managing agents and leaseholders to have confidence that their money is safe” says Nigel Glen, chief executive of ARMA.