CMP is client money protection and it is a scheme which protects the money which leasehold residents pay into an account for the purpose of paying the services which are provided for the maintenance and upkeep of the building they live in.
It is estimated that hundreds of millions of pounds of this money is vulnerable because it is under the control and management of letting agents. The Housing & Planning Act 2016 provides a delegated authority to the Secretary of State to decide on whether to require letting agents in England to be a member of one of the following :
- A CMP scheme that is approved by the Secretary of State
- A CMP scheme that is Government administered
A report from the working party set up by the Government to decide what to do came out in March. Their recommendation was to move forward with the legal requirement of CMP for all letting agents in England that handle client money. Concern was held that such requirement would restrict new firms entering the sector and therefore the group did not recommend that membership of a professional body should be a requirement to obtain CMP cover.
This development in terms of letting agents is probably overdue. But why only letting agents? Why not also managing agents?
2 Rivers believes it is appropriate for managing agents to be held accountable as well for the safe care of service charge monies which are held and managed by them to pay contractors. Any move in this direction would strengthen and protect the funds of thousands of leasehold residents in the United Kingdom.