Compulsory Client Money Protection legislation

I was nearly arrested last month because of the new GDPR regulations. Don’t worry – my offence was not directly GDPR-related but it was certainly caused by it. The garage that I have used for years used to text me to say when a service or MOT was due on any of my cars. When the GDPR regulations came in, they thought, wrongly, that they were no longer allowed to do this so they stopped. As a result, I forgot to renew my MOT and was stopped on the M4.

One consequence of CMP will be that agents who stole money from client accounts will have to pay it back…

The situation started in a routine manner. The policeman said that their ANPR system had recorded that my MOT had expired and showed me the screen to prove this. He said that he would report the matter and that I would get a fine or a warning. I apologised and said that the garage had forgotten to remind me. He said that was no excuse and went off to write the ticket. Then the trouble started.

Whilst the first policeman wrote up the ticket, his colleague said that I would now have to call a tow truck to take my car home as I was not allowed to drive it. I thought this was ridiculous so I Googled it on my phone. Sure enough, it said that I could drive the car to a prearranged MOT appointment, so I rang my garage and booked one for three hours later. I told the policeman that I had booked an MOT and invited him to check with the garage. He said I could still not drive my car. I said he was wrong and showed him the Google page to prove this.

He continued to dispute this and I rather foolishly lost my temper. He threatened to arrest me for obstructing justice so I turned the video on my phone on and asked him to explain on camera why I could not drive my car to a prearranged MOT appointment. Fortunately, at this point his colleague came back and said that I could drive to the garage so long as I went directly there.


So that is how GDPR nearly got me arrested. Did the legislators imagine that a local garage would completely misunderstand the regulations and, as a direct consequence of their attempt to protect my privacy from someone I’ve known for 20 years, I’d be threatened with arrest? But this happened, so other forthcoming legislation in the property sector may have similar unintended consequences.

The ban on tenant fees will have far reaching consequences that the government cannot have imagined. One consequence is that most agents will have to stop offering landlords a let-only option because without the tenant fee, it is simply not profitable.

Some landlords will be persuaded to switch to a managed or rent collection contract with monthly payments but some will not be prepared to pay higher fees and will try to let their own property without an agent. But most don’t know how to do this. There are 127 regulations that they must comply with before a tenant can move into their property and only a few landlords know what they are. A direct consequence will be that thousands of landlords will be hit with big fines for failing to comply with legislation that they did not know about. Compulsory CMP legislation is sensible but this too will have consequences. One is that agents who have already stolen money from their client accounts will have to find a way to pay it back and a very obvious way to do this will be to delay paying rent to their landlords – so the extra protection for tenant deposits will come at the cost of greater risk to landlords. How is this fair? For many landlords, the loss of a month’s rent would be catastrophic but there’s no discussion about this new threat.

A second consequence of the CMP is that it may shut down some perfectly honest letting agents and make it all but impossible for new letting agents to open. This is because in order to have Client Money Protection, a letting agent must have a dedicated client account. Many small letting agents still do not have one and banks are increasingly reluctant to offer client accounts particularly to new start-ups. So what happens if a letting agent cannot comply with the CMP legislation because they cannot find a bank that will open a client account for them? Do they lose their livelihood? Is this fair?

Right to Rent legislation made many landlords reluctant to rent to anyone lacking a UK passport. The reduction of the maximum deposit to five weeks could mean that tenants with pets will find it all but impossible to find accommodation.

These problems are caused because the people who draft the regulations have absolutely no knowledge of how the property market really works and are not prepared to consult with those that do. I don’t know what the answer is but if anyone in authority is listening, I for one would be more than happy to share 40 years of experience with you as would many other readers.

Adam Walker is a business transfer agent and management consultant who has specialised in the property sector for more than twenty-five years.

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