How to set up a client money protection (CMP) scheme

To legally handle rent or deposits as a property agent in England, you must join a government-approved Client Money Protection (CMP) scheme or risk a fine of up to £30,000. This scheme acts as a safety net, ensuring that if your business goes bust or funds are misappropriated, your clients (landlords and tenants) can claim their money back.

Why do you need a CMP scheme?

In the property world, trust is everything. Since April 2019, it has been a legal requirement for all private sector letting and property management agents in England who handle client money to be part of an approved scheme. This includes rent, deposits that haven't yet been transferred to a deposit protection scheme, and money held for repairs or maintenance.

Aside from staying on the right side of the law, being part of a CMP scheme gives your clients peace of mind. It shows you are a professional, regulated business that takes its financial responsibilities seriously.

Approved CMP schemes in the UK

You cannot simply choose any insurance provider; you must join one of the government-approved schemes. The main providers include:

• Propertymark
• Client Money Protect
• MoneyShield
• UKALA (UK Association of Letting Agents)
• RICS (Royal Institution of Chartered Surveyors)

Steps to join a scheme

1. Prepare your documentation: Most schemes will ask for proof that you have a dedicated client bank account and valid Professional Indemnity insurance. They may also ask for your company registration details.
2. Choose a provider and apply: Compare the membership fees of the approved providers listed above. Once you've chosen one, complete their online application form.
3. Pay the membership fee: This is usually an annual fee based on the size of your business or the volume of client money you handle.
4. Receive your certificate: Once approved, the scheme will issue you a formal membership certificate.

Your legal display requirements

Simply joining the scheme isn't enough. To be fully compliant, you must follow these transparency rules:

• Display the certificate: You must hang your CMP certificate in a prominent place in every office where you deal with the public.
• Website transparency: You must publish a copy of your certificate on your business website.
• Provide copies on request: If a client asks to see your proof of membership, you must provide it to them free of charge.

Pro Tip: Set a calendar reminder for your renewal date. If your membership lapses, you are technically operating illegally the very next day, which could lead to a local authority inspection and a heavy fine.

Ongoing compliance

Joining a scheme is an ongoing commitment. Most schemes will require you to submit an annual accountant's report or a self-certification to prove that you are still handling client money correctly. They will want to see that your client account is separate from your business's day-to-day operating account to ensure funds are never "co-mingled."

Requirement	What you must do
Separate Account	Ensure client money is kept in a designated "Client Account" at a bank.
Insurance	Maintain active Professional Indemnity insurance at all times.
Reporting	Notify your scheme provider immediately if your business details or bank details change.