"This is not a criticism of any individual scheme. The Property Ombudsman, CMP schemes and membership bodies all have their own role to play and all are working towards the same goal. The issue is that each holds only part of the picture"
- Chris Mason - The Letting Partnership
The latest expulsions from The Property Ombudsman have exposed serious gaps in the lettings industry's client money protection framework, with analysis by The Letting Partnership finding that more than £16,000 of landlord and tenant money has been left with no practical route to recovery.
Of the six agencies expelled last week, three were removed due to client money breaches. In two cases, the agency had no client money protection (CMP) cover in place at the point of expulsion. In a third, cover had lapsed.
Brimar Property Services, expelled over £950 of missing client money, had no CMP cover in place at the time. Skampi, where a total award of over £5,000 was made covering rent owed, management fee refunds, and compensation, also had no active cover, with £3,250 still outstanding. Hunter Ashley was expelled after more than £12,000 of client money could not be accounted for. It had previously held cover with a provider, but that cover had lapsed by the time of expulsion.
Together, the three cases account for £16,200 of landlord and tenant money left without scheme-backed reimbursement. The Letting Partnership has been clear that the problem is not a lack of regulation. CMP, redress, and compliance requirements already exist across the sector.
The issue is fragmentation: different schemes hold different information, and no single process independently verifies that an agent remains compliant across all core requirements at the same time. Agents can fall through the gaps between schemes, leaving landlords and tenants exposed.
"Last week's expulsions are a clear example of the gaps that can exist within the current system," said Chris Mason, chief operating officer of The Letting Partnership.
"Whilst the industry has multiple compliance schemes in place, there is no single, independent process that gives everyone the same verified picture of whether an agent is compliant."
"In three of the six cases highlighted by The Property Ombudsman, the expulsion related to client money issues. In two of those cases, there was no CMP cover in place, and in the third, the cover had lapsed. As a result, more than £16,000 of landlord and tenant money appears to have been left with a limited realistic prospect of recovery," he continued.
"This is not a criticism of any individual scheme. The Property Ombudsman, CMP schemes and membership bodies all have their own role to play, and all are working towards the same goal. The issue is that each holds only part of the picture," Mason added.
"At present, an agent can be compliant with one scheme, fall behind with another, or allow their cover to lapse without there being any consistent mechanism to identify and flag the problem. It is the inconsistency of oversight, rather than the lack of regulation, that is leaving consumers exposed," he said.
"The solution is a single, independently verified annual audit that is recognised across the industry," Mason noted.
"One review, completed once per year, could be shared with redress schemes, CMP providers, franchisors and membership bodies to ensure everyone is working from the same information."
"Wider adoption across the industry would help close the current compliance gaps and reduce the likelihood of landlords and tenants being caught out in future. If the industry cannot demonstrate that it is able to identify and close these gaps itself, the risk of further regulation becomes increasingly difficult to avoid," he concluded.
