Client Money Protection (CMP) explained for estate agents

Client Money Protection (CMP) – What it is, why it matters and how to make sure you’re covered

If you’re running an estate agency, handling client funds, whether it’s rent, deposits or sales receipts, is part of your everyday work. But with that responsibility comes risk. One of the key safeguards you need in place is Client Money Protection (CMP).

In this article we break down what CMP is, why it matters and what estate agents need to know so you can protect your business and your clients with confidence.

What is Client Money Protection (CMP)?

Client Money Protection (CMP) is a form of insurance designed to protect clients’ funds in the event that an estate agent misuses or misappropriates money held on their behalf. Essentially, it safeguards landlords, tenants and other stakeholders if something goes wrong.

For estate agents, CMP is not a “nice to have”. In the UK, it is mandatory for agents who hold client money, whether that money relates to rent, deposits, service charges or other funds. This protects your clients and helps maintain trust in your services — a fundamental part of doing business in property.

Why CMP matters for estate agents

Protecting client money is a legal and ethical obligation. But beyond compliance, CMP also:

• Builds trust with landlords and tenants – Clients want assurance their money is safe
• Reduces professional risk – CMP guards your business against financial loss and reputational damage
• Enhances credibility –  Agencies with appropriate protection and transparent policies stand out in a competitive market
• Supports compliance with industry standards – Most professional bodies and associations require it as part of membership criteria.

Without CMP in place, your agency could face penalties and regulatory action. Even worse, if client money goes missing, the financial and reputational damage could put your business at risk.

What does CMP cover?

A typical Client Money Protection policy covers:

• Misappropriation of funds – Protection if an agent or employee wrongly uses client money
• Fraud and theft – Coverage for funds lost through dishonest acts.
• Errors in handling funds –  Protection for genuine mistakes that result in financial loss.

It’s important to understand what your specific policy covers, and equally what it does not. Not all policies are the same, and clarity on terms will help ensure you’re not left with unexpected gaps.

Who needs CMP?

CMP is required if your agency:

• Holds client funds at any time.
• Is a member of a professional body (like ARLA Propertymark or The Property Ombudsman).
• Wants to comply with trading standards.

Even if you work with a third party to manage funds, you should check whether your business is considered to be holding client money. When in doubt, it’s better to be cautious and get professional advice.

How to choose the right CMP solution

Not all CMP policies are the same. When comparing options, consider:

Extent of coverage

Does the policy cover fraud, theft and administrative errors?

Limits and excesses

What are the monetary limits and how do excesses affect you?

Provider reputation

Choose insurers with solid experience in property sector risks.

Compliance support

Some providers offer guidance on best practice and compliance checks.

Working with an adviser who understands estate agency finances and risks will ensure you get protection that fits your business, not a generic off‑the‑shelf policy.

Practical steps to protect client money

Putting CMP in place is one part of client money safety. You should also:

1. Segregate client funds from business funds in dedicated accounts
2. Keep clear record‑keeping and reconciliation processes
3. Train staff on handling procedures and compliance duties
4. Review your protection policy regularly as your business grows

These steps not only strengthen your CMP but also improve internal controls and reassure clients that their money is in safe hands.

Avoiding the pitfalls

Many agencies make simple mistakes that put them at risk, such as assuming a third‑party processor automatically covers client funds without checking the terms, failing to update policies when business operations change, or holding client money informally without clear documentation.

These kinds of errors can be costly, which is why taking a proactive approach to client money protection is essential.

By staying vigilant and ensuring your processes and policies are up to date, you not only protect your clients but also give yourself peace of mind — something every estate agent should prioritise.