Posted on: 9 March 2023
Trading Standards is reminding letting agents of their legal obligation to protect money they are holding on behalf of a client after a tribunal upheld an £8,000 fine imposed on a firm.
Heart of the South West Trading Standards imposed the fine on Swallows Property Ltd., in Frome, Somerset, after they had repeatedly ignored advice to obtain Client Money Protection that protects the landlords and tenants’ money held by a letting agent.
The business appealed against the fine to the First Tier Regulatory Chamber. This month the Chamber rejected the appeal and upheld the fine, meaning the company will have to pay.
The Client Money Protection Schemes for Property Agents Regulations 2019 place a legal requirement on all letting agents and property managers in the private rented sector, who handle their money on behalf of their clients, to belong to one of the six prescribed Client Money Protection Schemes.
These schemes protect the money of both the landlord and tenant in the event of the insolvency of the agent. This is different from Tenancy Deposit Protection and covers items such as rent.
Having identified that Swallows Property Ltd. did not have the required scheme membership, Trading Standards advised the trader and made repeated efforts to encourage them to obtain the protection.
However, scheme membership was not obtained and in May 2022 Trading Standards issued the fine.
In the judgement the Tribunal pointed out that the Client Money Protection law serves a crucial purpose of protecting consumers – and that professional practitioners must be assumed to be aware of the law that regulates their activities and have a duty to keep themselves up to date on their legal obligations.
The maximum penalty that can be issued to a Letting Agent or Property Manager who handles client monies and fail to belong to Client Money Protection scheme is £30,000.
A failure to display their certificate on their website and in their office could also lead to a hefty £5,000 fine.
Ben Newell Business Support and Innovation manager at the Heart of the South West Trading Standards Service, said: “This case issues a clear warning to those involved in letting agency and property management to ensure that they are part of one of the six approved Schemes and to make sure that their certificates are accurately displayed.”
For further information of the Client Money Protection Scheme visit GOV.UK – Protecting clients’ money if you’re a property agent.