Insurance firm Hamilton Fraser has signalled its entry into the deposit replacement market with the launch of a new brand called Ome.

It will sit alongside My Deposits, a traditional deposit scheme, using the same dispute resolution process but, said Hamilton Fraser, will operate independently.

Today’s announcement  is light on detail but Hamilton Fraser, which also runs the Property Redress Scheme – a government-approved alternative to The Property Ombudsman –  plus landlord and medical insurance products, reveals it will enter the sector with Ome in early 2020.

Group chief executive of family-run Hamilton Fraser Eddie Hooker, who has previously raised concerns over transparency of deposit alternatives, said it was important the product is not promoted as an affordability issue but as an aid to cashflow.

Ome will be marketed as an option that doesn’t require a hefty upfront sum for those tenants who would rather have financial flexibility, Hamilton Fraser said.

The announcement gives no costings but says Ome is “as much about protecting landlords as it is about helping tenants”.

It will operate as a membership scheme, with tenants purchasing the benefit of not having to pay an upfront deposit.

If, following an adjudication, a tenant does not pay what they owe to the landlord Ome will pay the landlord and look to recover its outlay from the tenant.

It will provide landlords with the same financial protections they receive with a traditional deposit scheme so they will just need to consider if they want to deal with the administrative and legislative burden a traditional cash deposit requires, the statement said.

Hooker said: “Never have I been one to write these products off: despite my initial concerns I have always emphatically explained that if correctly implemented they offer a great deposit alternative.

“My key concern, however, was always that insufficient rigour and transparency I felt marred the products in their early days.

“A combination of external market factors as well as some changes within Hamilton Fraser have all had their impact on our decision.

“So as that day approaches, and we continue to prepare for our launch in 2020, I’ll explain exactly why I believe now is the right time for Hamilton Fraser to enter the market with a deposit alternative product that really has landlords, agents and importantly tenants in mind.”

Hooker’s son Matthew is listed as the co-founder of Ome.

It will also benefit from Hamilton Fraser’s resources as well as its own adjudication service HF Resolution, which already works with many of the existing deposit alternatives.

He said: “Ome is about offering choice and transparency within the market rather than completely rewriting the tenancy deposit rulebook and I think Ome’s deposit replacement membership will be the ‘go-to’ option for many renters and will complement the traditional deposit schemes in today’s rental market.

“Hamilton Fraser provides such a wealth of resources at our fingertips and has a rich history of expanding and improving its consumer offering.

“As a result, we are in a strong position to offer the best deposit replacement product available today in Ome, whilst also driving positive change in the UK rental sector and, like Hamilton Fraser, we will continue to raise industry standards.”