A property company has been fined £8,000 by Heart of the South West Trading Standards for failing to protect its clients’ money.
Swallows Property Ltd, based in Frome, Somerset, repeatedly ignored officers’ advice to register with a Client Money Protection scheme, which is a legal obligation to protect the money of landlords and tenants held by a lettings agent.
The company had appealed against the fine to the First Tier Regulatory Chamber, but in a tribunal this month the appeal was rejected.
The Client Money Protection Schemes for Property Agents Regulations 2019 place a legal requirement on all letting agents and property managers in the private rented sector to belong to one of the six prescribed Client Money Protection Schemes. The schemes protect the money of both the landlord and tenant in the event of the insolvency of the agent. This is different from Tenancy Deposit Protection and covers items such as rent.
Despite repeated efforts to encourage Swallows Property Ltd to sign up to a scheme, membership was not obtained and in May 2022 the fine was issued.
The maximum penalty that can be issued to a lettings agent or property manager who handles clients’ money and fails to belong to Client Money Protection scheme is £30,000. A failure to display certification on a company’s website and in its office could also lead to a £5,000 fine.
Ben Newell, Business Support and Innovation manager at Heart of the South West Trading Standards Service, said: “This case issues a clear warning to those involved in letting agency and property management to ensure that they are part of one of the six approved Schemes and to make sure that their certificates are accurately displayed.”
Councillor Rufus Gilbert, Devon County Council’s Cabinet Member responsible Trading Standards said: “Lettings agents who hold money on behalf of clients have a legal obligation to put in place these safeguards.
“Not being aware of the regulations is not an excuse and those who do not subscribe to one of the approved schemes could have to pay up to a £30,000 in fines.”