Agents are being hit by big hikes in Client Money Protection, ahead of it becoming a legal requirement just weeks away, on April 1.
ARLA has defended the increases.
But shopping around appears to show that regulated agents – those belonging to a recognised trade body – might have to pay more than unregulated firms, who belong to no membership association and are bound by no codes of practice.
One agent has told EYE that when sent an invoice for over £1,000 from ARLA for its CMP insurance, they had looked at other options – including ARLA’s spin-off, Money Shield, which offers the insurance to non-members.
The ARLA agent, who has requested anonymity, says that when they talked to Money Shield, claiming that they did not belong to a regulated body but usually held £1m or more in their client money account, they were quoted £450 for insurance.
Separately, one ARLA agent told EYE that their new bill is over 300% higher, at over £1,020.
Mark Crampton Smith, managing director of College and County which has two offices in Oxfordshire, had been paying ARLA Propertymark the flat rate of £340 a year.
Crampton Smith said he was concerned that the huge jump might be because ARLA – which asked agents to back its campaign for mandatory CMP – now offers the insurance to non-member agents via Money Shield.
When he complained to ARLA about the new price, he says he was told that it related to the amount of client money his business holds.
He says he was also directed to an open letter explaining the new pricing structure.
This says that because of the nature of mandatory CMP as from April 1, Propertymark has been required to increase its insurance cover which has had a “dramatic impact” on the costs associated with the scheme.
However, Crampton Smith says that this year’s letter is in marked contrast to last year’s, when Propertymark did not increase its £340 CMP levy, saying it had never been more important to deliver value for money for its members.
Crampton Smith told EYE he is extremely angry about this year’s unexpected hike.
He said: “I am disappointed that ARLA has not been able to ring-fence the risk that regulated agents pose in terms of CMP.
“The risk to their insurers has not changed after all.
“Last year, I did as requested by David Cox and responded to the consultation on CMP, but I had no idea that their intention was to extend their CMP to unregulated agents.
“Last year they made a big thing about keeping the levy the same, citing the impending tenant fee ban.
“To increase it by 300% a couple of months before implementation is a bit ironic.”
David Cox, CEO of ARLA, told EYE yesterday: “I can well understand members’ frustration at the increase in the CMP levy.
“It was the last thing we wanted to do when we are so conscious of the cost pressures agents are under with the tenant fees ban.
“However, Propertymark has been required to increase its insurance cover ten-fold.
“This has had a dramatic impact on the costs associated with the scheme, and whilst we have not increased the CMP levy in two years, in order to apportion costs realistically to reflect the potential risk, a graduated CMP levy based on the amount of money in their client accounts has been introduced.
“For most members the CMP levy has only gone up by £20.
“For the levy to rise to over £1,000, it means the agent has over £1m in their client account.
“Also, I can assure members that Money Shield has no impact at all on the Propertymark CMP levy.
“The two schemes are entirely separate, with different insurers and run off separate IT systems.”