Client Money Protection: What It Covers If Your Agent Goes Bust

What Client Money Protection Is

Letting and managing agents routinely hold significant sums of money belonging to landlords and tenants — rent collected before it is passed on, deposits awaiting protection, or funds for repairs. Client Money Protection (CMP)is insurance-backed cover, provided through an approved scheme, that reimburses landlords and tenants if that money is lost or misused, including in cases of fraud or the agent's insolvency.

The Legal Requirement Since 2019

Since 1 April 2019, property agents in England who hold client money must belong to a government-approved (or exempt) Client Money Protection scheme. Operating without required CMP is a banned practice under the lettings and property management regime, and councils can issue a financial penalty to agents who fail to comply.

How to Check an Agent Is Protected

A compliant agent must publicly display their CMP membership certificate, both at their office premises and on their website, and must provide the details on request. If you cannot find this information readily, ask the agent directly for their CMP scheme name and membership number, and verify it independently with the scheme provider if in doubt.

What CMP Covers — and Does Not

CMP is designed specifically to cover loss or misuse of client money, such as:

• Rent collected on a landlord's behalf that the agent fails to pass on
• Deposit funds held before being placed in a deposit protection scheme
• Repair or maintenance funds held for future work
• Loss caused by fraud, theft or dishonesty within the agency

It does notcover general dissatisfaction with the standard of letting or management service, and it is a distinct protection from tenancy deposit protection schemes, which exist specifically to ring-fence a tenant's deposit and resolve end-of-tenancy disputes.

How to Make a Claim

Claims are made directly to the specific CMP scheme the agent was a member of at the relevant time — not to the agent, and not to a general government fund. You will typically need to show evidence of the money the agent was holding on your behalf (statements, invoices, the tenancy or management agreement) and how it was lost. Schemes generally set a time limit for making a claim after you become aware of the loss, so act promptly.

If an Agent Has No CMP

Report a non-compliant agent to your local council's trading standards team, which enforces the CMP requirement and can issue penalties. If you have already lost money to an unprotected agent, seek advice on recovering it directly through legal action, since the CMP safety net will not apply. Use our Rental Yield Calculator to keep track of expected versus actual rental income if you manage a let property.

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