“Landmark” CMP ruling sees huge fine for lettings...

Trading Standards is describing a penalty imposed on a London letting agent as “a landmark” after the company failed to comply with Client Money Protection laws.

A tribunal found, beyond all reasonable doubt, that Carter & Reeves Limited - a Camden agency - was in breach of the Client Money Protection Regulations which require property agents belong to a CMP scheme.

A penalty of £24,000 was upheld against the agent.

Tribunal Judge, Alexandra Marks ruled: “On the basis of my findings, it is clear that during the relevant period there was no protection of client money in place as required by the legislation for the assurance of the public. This failure to protect client money could have resulted in financial harm to those entrusting their money to Carter and Reeves.”

Regulation 3 of the CMP Regulations makes it a requirement for any property agent holding client money to belong to one of the six client money protection schemes.

Judge Marks noted that since Carter & Reeves Ltd.’s membership of an approved client money protection scheme relied on the membership of director, a Mr Draper, once he had ceased to be a director of Carter & Reeves Ltd, the company no longer belonged to that (or any other) CMP scheme.

She concluded: “Agents are running a business and are expected to be aware of their legal obligations, and the true status of each of their directors.”

From April 2019, letting agents have been required by law to belong to an approved Client Money Protection scheme to ensure that tenant and/or landlord money is protected should the business become insolvent. Failure to comply with this requirement can carry a maximum penalty of up to £30,000.

Letting agents also have a duty to publish on their websites and in their offices their CMP certificate, evidence of membership of an approved redress scheme and specific material information that tenants are to be made aware of prior to entering a contract. Failure to do so can each carry a maximum penalty of up to £5,000.

Since the regulations came into force, Trading Standards authorities across London have issued penalty notices totalling in excess of £3m.

Don Silcock, chair of London Trading Standards Lettings Group, comments: “It is reassuring to see the vast majority of penalties being upheld against London letting agents, as Tribunals continue to take a firm line for non-compliance, as reflected in the level of penalties imposed”