Solicitor faces fine for CMP breach

In a significant case highlighting the responsibilities of solicitors engaging in letting agency and property management work, Safeagent, the UK's leading not-for-profit accreditation scheme, has warned legal professionals about the importance of adhering to Client Money Protection (CMP) legislation. Recently, a Shropshire solicitor faced a civil financial penalty of £8,400 after being found to have conducted property management activities while not being a member of an approved CMP scheme.

The Shropshire Council issued the fine when it discovered that the solicitor was holding client funds without appropriate protection. Following the solicitor's appeal to the First-Tier Tribunal, the case was keenly analysed by Judge Brian Kennedy KC, who provided a comprehensive decision on 4 March 2025. In dismissing the appeal, Judge Kennedy KC clarified the obligations of solicitors under the CMP regulations, stating, “There is no exemption in the legislation for solicitors carrying out letting agency and property management work.”

The judgment notably responded to the solicitor’s argument concerning the management of just two properties and the belief that, as they were regulated by the Solicitors Regulation Authority (SRA), their client account sufficed for protection. However, the ruling made it explicit that the CMP legislation does not allow exceptions based on the volume of properties managed.

This case underlines the necessity for solicitors, especially those dealing with probate work involving rental properties, to be aware that such activities may constitute ‘letting agency work’ or ‘property management work’. Consequently, these actions might obligate them to be part of a CMP scheme. Isobel Thomson, chief executive of Safeagent, commented, “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 investigation into the solicitor’s actions was led by Alexandra Cosgrove, a Trading Standards Officer with Shropshire County Council, who emphasised the growing trend of solicitors managing properties on behalf of longstanding clients. She stated, “This was a unique and interesting case...the judgement is very clear, as Judge Brian Kennedy KC fully considered the definitions and interpretation within the legislation in detail.”

The implications of this ruling could be far-reaching, not only impacting the legal profession but also extending to other sectors where minimal letting agency work is conducted as an adjunct to primary business operations. The case serves as a crucial reminder for professionals in various fields about the importance of compliance with client money regulations as they navigate the complexities of property management.