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Written by rosalind renshaw

A leading member of the NAEA has hit out at the huge hike in the cost of client money protection insurance.

At £432, it has more than doubled.

Trevor Kent, a former NAEA president, says that he, and other agents, will quite simply refuse to pay it.

Kent forecast that there will be a stand-off.

He also hit out at what he claims is the secrecy surrounding this year’s hike.

He said: “There is no way I’m going to pay £432 to protect money due to large firms with enormous turnovers, doubtful morals and even more doubtful business practices.

“I think the whole premise of this levy is outrageous.

“Last year as a one-man band I was forced to pay £200, the same as the largest multi-branch rental firm in the country. It is ludicrous. 

“This year they allowed annual renewals to be accomplished before whispering a word of the intended increase which they knew was to be massive.

“Neither did the NAEA warn members that the rules on the accountants’ reports were to be made so stringent that the compliance cost of these might double the accountants’ fee to each member too. 

“NFoPP has resolutely ignored calls for the charge to be commensurate with the size of the business, and has also ignored the fact that all deposits are now, by law, protected elsewhere – very strange.”
In a letter to NFoPP members whose premiums to the CMP scheme are due, chief executive Peter Bolton King denies that there has been any secrecy, and says that agents should use the CMP scheme as a marketing tool.

The letter says: “The Client Money Protection Scheme is a great marketing tool setting our members apart from those who do not belong to a professional body. It demonstrates to landlords and tenants alike that their money has real protection.”

Bolton King goes on: “During the past year we have made no secret of the fact that unfortunately we have been experiencing unprecedented levels of claims against our policy due to a relatively small number of firms closing down and illegally using clients’ money in an effort to survive.

“To put this in perspective, we have received claims on about 10 firms in both 2009 and 2010. In 2009 the money involved will amount to over £600,000 and in 2010 this is likely to be considerably higher.”

The letter adds: “I can also assure you that we have looked at all options to keep our premium as low as possible. As a result the insurers accept the fact that we scrutinise accountants’ reports very carefully and do not hesitate to carry out an inspection of a member’s books if we are concerned

“Having read the above, and heard our warnings throughout the year, you will not be surprised to hear that despite our best efforts, the insurers have imposed a hefty increase in our premium for 2011 and in addition we have to pay the trigger premium relating to 2009.

“We are well aware of the need for us to try and help members with their costs, but unfortunately NFoPP have no option but to pass on this increase to members due to the growing level of claims on the scheme experienced over the last financial year. 

“We are in ongoing negotiations with the scheme’s insurers to mitigate further increases in the levy.”

The letter concludes by asking NFoPP members to make the most of having CMP by using the new NAEA or ARLA Client Money Protection leaflet in promotional material when seeking a new instruction.

The letter does not mention the new SAFEagent initiative.


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    Well said Big T - its time people realised that NFoPP is pointless and toothless. There are better value schemes - what do ARLA actually offer their members other than gala dinners and increasing costs? Do the public care? No.

    • 14 June 2011 19:40 PM
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    The NAEA lost the plot some time ago.
    Mr P Bolton-King has just taken on another job when he should be concentrating on the needs of the members, is he thinking of 'jumping ship'?

    • 14 June 2011 10:31 AM
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    I think you will find that the underwriters not the NFoPP calculate the premium based upon frequency and value of claims in the context of an uncertain economic climate - the two factors combine to explain such a huge hike.

    • 14 June 2011 10:11 AM
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    NFOPP calculates its premium figures based on claims for the previous year together with the excess. Above a certain figure level which the insurer indemnifies claims there is a "trigger" mechanism that means NFOPP has to reclaim this through their members.

    On TK's point all but one of the claims is against one office agents, so the larger firms are to a degree insulated from going under mainly by their turnover.

    I expect that the CMP premiums will reduce in future years as claims will be restricted to a maximum of 3 months rent for landlords.

    • 14 June 2011 09:55 AM
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    What I find really odd about the NAEA is this.

    In every other organisation, past presidents are revered and remain close. From sailing clubs, to golf clubs, to London Guilds and PTA's.

    The NAEA are unique - their biggest critics are Hugh Dunsmore Hardy and Trever Kent - Melfyn Williams vanished. Very odd.

    • 14 June 2011 09:47 AM
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    Brilliant - TK moaning and then a story about the need for greater action against letting agents. We can't have it both ways. A leading Member of the NAEA?

    • 14 June 2011 09:39 AM
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    Dave's correct. Negotiator mag (sorrt EAT) did a feature in march - Royal Sun Alliance are the only provider and underwrite both NFoPP and NALS.

    Try talking to an underwriter - "Excuse me - can I insure against a letting agent going bust or pinching clients money?"

    Reply "Yep, as easily as you can insure against a catholic Pope"

    • 14 June 2011 09:31 AM
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    I believe that only ONE insurer provides CMP.

    NFoPP and NALs are the only 2 schemes underwritten by an insurance company. You cannot get CMP from any other source or any other broker.

    TDS rely on the regulatory bodies to cover their losses.

    • 14 June 2011 09:24 AM
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    Chris Wood

    With respect, that's a very simplistic view. An agent near us who went bust recently took clients for £400k.

    Of this - only £275K was deposits - the rest was rents, floats and deposits awaiting registration.

    Thats why CMP is so important - too many people fail to understand the extent of the issue. There are agants with CA deficits who use rents to pay outgoing tenants deposits and then replace them with new monies from cashflow.

    • 14 June 2011 09:21 AM
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    Your broker has misunderstood Jules (and obviously so, otherwise CMP policies wouldn't exist). What you are paying for is a policy to insure your clients against the risk of you committing a criminal act. The policy does not indemnify you - the insurers pay out to the clients then come after you for the money.

    A close parallel for those who remember them were MIGs, where, if you had a high LTV mortgage you bought a policy which protected the lender and paid them the shortfall if they repossessed and sold your property whilst it was in negative equity. Although you bought and paid for the policy it protected the lender - not you - and the insurer could still come after you for the shortfall.

    • 14 June 2011 09:21 AM
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    Jules - thats why there are only 5 CMP providers of which only NFoPP and NALS are insurance backed rather from fund as with RICS and Law Society.

    • 14 June 2011 09:18 AM
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    I asked my broker about client money protection insurance. He said it was "impossible to insure yourself against committing a criminal act".

    • 14 June 2011 09:06 AM
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    Alternatively, do what my firm does and use these fellows https://www.depositprotection.com/Login.aspx?ReturnUrl=%2faccount%2fsummary.aspx The DPS. I don't need insurance as my customers deposits are safely tucked away, held by a third party.

    I haven't seen how the NFoPP figures have been calculated but I have a damn good idea of the process that was gone through. Just take a look at PropertyLive to see how good NfoPP are at running projects.

    • 14 June 2011 08:41 AM
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    I am with Big T on this 100%

    “The Client Money Protection Scheme is a great marketing tool setting our members apart from those who do not belong to a professional body. It demonstrates to landlords and tenants alike that their money has real protection.”

    Yep. Buts its not just the NAEA ' NFoPP who offer it and NFoPP may write letters to members, when when was the last time they told the public?

    I am beginning to understand why SAFE agent is such a good idea.

    • 14 June 2011 08:35 AM
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