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safeagent warns that solicitors who find themselves carrying out letting agency and property management work must comply with Client Money Protection (CMP) legislation after one was recently fined[1] for not belonging to an approved scheme.
Shropshire Council issued the civil financial penalty of £8,400 after discovering the solicitor was undertaking property management or letting agency work and holding client funds while not a member of an approved client money protection scheme.
Following an appeal to the First-Tier Tribunal, Judge Brian Kennedy KC considered detailed submissions from both parties. In a written decision given on 4 March 2025, Judge Kennedy KC dismissed the solicitor’s appeal and confirmed the penalty.
Safeagent is advising solicitors who carry out lettings and management work to use an agent – preferably a safeagent who complies with all the necessary legislation – to do this for them.
Commenting on the First-Tier Tribunal ruling, safeagent’s chief executive Isobel Thomson, said:
“This is an unusual case but we felt it needs highlighting as solicitors may be unaware that in certain circumstances they come under the CMP Regulations.
“The solicitor argued in their defence that they only managed two properties so questioned whether they were required to be a member of an approved CMP scheme. They are regulated by the Solicitors Regulation Authority (SRA) and felt the money was in a client account and properly protected.
“But the Judge stated that there is no exemption in the legislation for solicitors carrying out letting agency and property management work. While it was agreed that the solicitor did not need to belong to a redress scheme as there is an exemption in that Order, no such exemption exists in the CMP legislation.”
The judgement also highlights that where a solicitor carries out probate work and rented properties are part of an estate where tenants pay rent to the solicitor’s firm, this could be classed as ‘letting agency work’ or ‘property management work’, which may require them to be a member of a CMP scheme.
The case was investigated on behalf of Shropshire County Council by Alexandra Cosgrove, a Trading Standards Officer and CTSI Lead Officer for Property and Lettings working for Operation Jupiter for the Central England Trading Standards Authorities (CEnTSA). She said:
“This was a unique and interesting case. The authority was told that it is fairly common practice for solicitors to manage properties for long-standing clients, especially where they’ve carried out conveyancing work.
“The judgement is very clear, as Judge Brian Kennedy KC fully considered the definitions and interpretation within the legislation in detail.
“He also compared it to other related legislation for letting agents and property managing agents and found there is no exemption for solicitors in relation to the requirement to hold client money protection. This decision could have serious implications for the legal profession and potentially other professions carrying out very minimal letting agency work as a sideline to their primary business.”
About CEnTSA
CEnTSA is a West Midlands regional group co-ordinating the work of trading standards authorities covering 14 local authorities including Shropshire. See Central England Trading Standards Authorities – CEnTSA for more information.
About Operation Jupiter
Operation Jupiter is a three-year funded project by MHCLG for CEnTSA ending in June 2025. The purpose of the project is to enforce legislation applicable to letting agents where non-compliance is found. In particular, by ensuring they are registered with client money protection scheme and be a member of an approved redress scheme which are mandatory requirements for all letting agents.
