Client Money Protection (CMP)

Legislation in the private-rented sector is changing all the time. One of the most important new laws is compulsory Client Money Protection (CMP).

CMP protects the money agents hold on behalf of a client. But why do landlords and tenants need to understand how the new legislation could help them?  

What is CMP? 

It’s estimated that letting agents hold around £3billion of client money. From 1 April 2019, all agents need to belong to a government-approved CMP scheme to safeguard these funds. The insurance scheme pays landlords and tenants back if an agent ‘misappropriates’ the rent, deposit or other client funds. 

The new legislation also means letting agents need to prove that they are handling clients’ money in the right way by: 

-Holding this money in a separate bank account to their operating funds 

-Having indemnity insurance so the money can be reclaimed if any employees commit fraud. 

What does CMP cover? 

Client money includes landlords’ repair funds, rents, service charges and arbitration fees. The new CMP legislation is different from tenancy deposit protection (TDP). However, CMP covers tenancy deposit money whilst it’s with the agent i.e. before or after it’s protected by a TDP scheme. 

Agents who don’t handle any client money, for example, those who just offer landlords a tenant find service, won’t need to have CMP.   

Approved schemes

You can join any of the following approved schemes:

-Client Money Protect

-Money Shield



-Safeagent (previously NALS)

-UKALA Client Money Protection

You must:

hold your clients’ money in an account with a bank or building society authorised by the Financial Conduct Authority

get a certificate confirming membership of the scheme you join, and provide it to anyone who asks, free of charge

You’ll need to display the certificate:

in any office where you deal with the public

on your website

You may be fined up to £5,000 if you do not display a certificate of membership or provide it when asked.

What we offer

We, at MGT, can advise you on how to set up systems, processes and procedures to streamline your business operations irrespective of your size

How to handle clients’ money

Holding deposits, keeping client accounts, paying interest.

Talk to us about the detailed requirements, under sections 12 to 15 of the Estate Agents Act 1979 and the Estate Agents (Accounts) Regulations 1981, for handling clients' money, including:


-keeping client accounts

-payment of interest


You may be asked to hold a deposit. This means that you’re holding money on trust, or in Scotland as an agent. You’ll need to account for the client's money in a very precise way, as explained below.

There are two types of deposit:

-pre-contract deposit: paid before the exchange of contracts to show a serious intention to buy. In Scotland, it’s against the law to accept a pre-contract deposit.

-contract deposit: paid at the exchange of contracts

You must put the deposit in an account, called a client account, which is set up for this purpose at a bank, or other authorised financial institution.

You can pay money from a connected contract, such as money used to buy carpets or curtains, into a client account.

You cannot pay any other client money into this account. For example, if you also work in lettings or property management, you cannot pay client money such as rents into the client account set up for estate agency deposits. 

Keeping client accounts

When you keep a client account, you must:

-pay clients’ money in without delay

-keep detailed records of all transactions 

-give detailed receipts for all money you get

-have your accounts examined and reported on by a qualified auditor, within six months of the end of your accounting year

-be able to produce your latest auditor's report, if an authorised person, for example a trading standards officer, asks you to

-keep the accounts and records for six years after the end of the accounting period they relate to, even if you take them over from someone else

If you don’t, you could face prosecution and a fine of up to £2,500. 

Payment of interest

If the interest on a deposit of over £500 is more than £10, you must pay it to the client