A lettings accounting service says a batch of expulsions from The Property Ombudsman reveal a major gap in the lettings industry’s compliance framework.
Letting Agent Today recently report on six agencies expelled by The Property Ombudsman.
Three of them were due to client money breaches.
Additional checks found that in two cases, the agency had no client money protection cover in place at the point of expulsion, whilst in a third, cover had lapsed.
An analysis by The Letting Partnership shows that the three cases mean that £16,200 of landlord and tenant money appears to have been left without any practical recovery route.
In each case, the absence or lapse of Client Money Protect (CMP) cover means landlords cannot rely on scheme-backed reimbursement.
The Letting Partnership has highlighted that the issue is not a lack of regulation – CMP, redress and compliance requirements already exist across the sector.
The problem is that different schemes hold different information, with no single process or independent review ensuring that an agent remains compliant across all core requirements at the same time.
As a result, agents can fall through the cracks between schemes, leaving landlords and tenants exposed.
Chris Mason, chief operating officer of The Letting Partnership, comments: “Last week’s expulsions are a clear example of the gaps that can exist within the current system.
“Whilst the industry has multiple compliance schemes in place, there is no single, independent process that gives everyone the same verified picture of whether an agent is compliant.
“This is not a criticism of any individual scheme.
“The Property Ombudsman, CMP schemes and membership bodies all have their own role to play and all are working towards the same goal. The issue is that each holds only part of the picture.
“At present, an agent can be compliant with one scheme, fall behind with another, or allow their cover to lapse without there being any consistent mechanism to identify and flag the problem.
“It is the inconsistency of oversight, rather than the lack of regulation, that is leaving consumers exposed.
“The solution is a single, independently verified annual audit that is recognised across the industry. One review, completed once per year, could be shared with redress schemes, CMP providers, franchisors and membership bodies to ensure everyone is working from the same information.”
