Client money protection and bank accounts: a practical guide

Opening a client account does not complete your agency's client money protection (CMP) arrangements. In England, private rented sector property agents holding client money must also belong to an approved CMP scheme. Start by checking the requirements that apply to your agency, then prepare the evidence for your account and membership applications (Ministry of Housing, Communities and Local Government).

Start with what money you hold, then work through the account and membership checks in order.

Is a client account the same as client money protection?

A client account holds the money. In England, approved client money protection (CMP) provides compensation for landlords and tenants if your agency cannot repay their money, including if it goes into administration. Opening a client account does not itself provide that protection (GOV.UK).

Keep tenancy deposit protection separate too. Do not treat any of these arrangements as a substitute for another.

Start by listing what your agency receives and why: rent awaiting payment to landlords, maintenance funds and deposits. Follow the money through your actual process, not just the labels in your software.

What should you check where your agency operates?

• England: property agents in the private rented sector who hold client money must belong to an approved CMP scheme (Ministry of Housing, Communities and Local Government).
• Wales: if your agency is a Propertymark member, client money must be held with a bank or building society regulated by the Prudential Regulation Authority (PRA), with permission to accept deposits (Propertymark).
• Scotland: agents holding client money must have CMP insurance unless they can demonstrate equivalent or greater protection through another body or membership organisation. Include reconciliation in your account setup too. Scotland's Letting Agent Code of Practice requires reconciliation at least monthly (Scottish Government).
• Northern Ireland: letting agents do not have to join a CMP scheme (GOV.UK).

Which type of account should you ask for?

Ask for a client bank account that keeps clients' money separate from your agency's own business money. Do not assume your ordinary business account is suitable. Tell the bank that you intend to hold money belonging to clients, and describe how receipts and payments will work.

• Ask the bank to confirm the account name and how it identifies the money as belonging to clients.
• Ask for written confirmation of whether the bank can use money in the account to cover your agency's debts.
• Ask your proposed CMP provider to confirm that the bank, account structure and bank confirmation meet its requirements before you proceed.

How do you organise the applications?

1. Speak to your proposed CMP provider. Request its current application checklist and ask which documents depend on the bank account being open.
2. Describe your activities to the bank. Include rent, maintenance funds and any other money you hold for clients.
3. Agree the account name and structure. Ask the scheme what bank confirmation it needs before accepting wording from the bank.
4. Use the provider's own templates where available. Client Money Protect supplies templates for applicants to send to their bank and for the bank's reply (Client Money Protect).
5. Check the documents together. Make sure the business name, account details and supporting accounting records are consistent before submitting them.

What if the bank declines your application?

Ask the bank why. Establish whether the issue concerns your business information, the proposed account structure or the bank's willingness to offer that account.

Keep the response and correct any misunderstandings before applying elsewhere. Do not describe client funds as your agency's trading income simply to get an application through. Our client account application troubleshooting guide is a useful next step.

How do you establish the CMP cost?

Request an individual quotation. Ask what information determines your membership fee, what the quotation includes, whether VAT applies and what could change at renewal.

Compare the evidence requirements as well as the fee. A quotation is not confirmation that your account or application has been accepted.

How do you stay ready for renewal?

Keep a working evidence folder rather than rebuilding it at renewal. As a practical checklist, include bank confirmations, statements, reconciliations, client balances and explanations of unresolved differences.

Ask your scheme which records it wants and in what format. Use our reconciliation guide to review your routine, and give someone clear responsibility for following up discrepancies.

Frequently asked questions

Should you open the bank account before applying for CMP?

Speak to the scheme before committing to an account, so you know what evidence it expects. Then agree the application sequence with the scheme and bank.

Does holding maintenance money count as handling client money?

Treat money held for a landlord's repairs as client money when planning your controls, rather than looking only at rent. Include it when describing your agency's activities to the bank and CMP provider.

Can a HealthCheck replace CMP membership?

No. Keep your membership application separate from the checks and evidence you prepare to support it.

TLP's CMP HealthChecks are accepted by Propertymark, Money Shield and Client Money Protect. Acceptance is subject to each scheme's requirements (The Letting Partnership). Explore our CMP and Deposit HealthChecks when planning your agency's checks.

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