CMP schemes protect the money of landlords and tenants in the event of a letting or property agent going into administration and against theft or misappropriation by the agent whilst it is in their custody or control.
These are frequently tenants’ deposits and landlords’ rental payments but can also include money held for repairs and maintenance to the property.
The government have established a working group with colleagues from the House of Lords to look at how CMP is currently operating and whether to go further by making use of the powers taken through the Housing and Planning Act 2016 to make it mandatory.
The consultation period is open until 3rd October 2016.
The letter from the DCLG said:
"The government’s concern about making CMP mandatory is that requiring agents to pay to belong to a scheme would force honest agents to buy insurance against themselves being fraudulent. Something the vast majority of agents are not.
"The voluntary system was reinforced by the Consumer Rights Act 2015 which required letting agents to transparently display prominently in their offices and on their websites their fees, whether or not they are part of a CMP scheme; and which redress scheme they belong to."
"It was the government’s view that with this the balance of regulation for letting agents was about right, and we need to allow time for the transparency measures to bed in. The Government are committed to review the broader transparency measures later this year. Through the passage of the Housing and Planning Act 2016 it became clear that there was a broad range of support for taking action on CMP specifically. Therefore the Government took a power to make CMP mandatory, if a working group demonstrated it was, in fact necessary.