The Right Property Company (Birmingham) Ltd v Dudley Metropolitan Borough Council
[2024] UKFTT 983 (GRC)
N&A Investments UK Limited & Anor v Staffordshire County Council
5 November 2024
[2024] UKFTT 984 (GRC)
First-tier Tribunal
A letting agent was fined for not having the right insurance to protect client money. The judge agreed they'd broken the rules but said the fine was too high, reducing it to reflect the company's cooperation and financial difficulties. The judge also thought the way the council calculated the fine was unfair.
Key Facts
- •N&A Investments UK Limited (Rutherfords Lettings and Sales) appealed a £7350 penalty for breaching Regulation 3 of the Client Money Protection Schemes for Property Agents Regulations 2019 by failing to belong to a client money protection scheme (CMP) between April 2012 and August 2023.
- •The company had previously been a member of Safeguard until March 2012 and mistakenly believed other arrangements provided sufficient CMP.
- •The Respondent (Staffordshire County Council) initially proposed an £18,000 penalty, but reduced it to £7350 after considering mitigating factors.
- •The Appellant argued that the penalty was unreasonable given their financial difficulties and lack of prior warning.
- •The Appellant provided financial accounts showing losses and high liabilities.
Legal Principles
Requirement to belong to a client money protection scheme for property agents holding client money.
Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc) Regulations 2019, Regulation 3
Grounds for appeal against a financial penalty: error of fact, wrong in law, unreasonable amount, unreasonable decision.
Schedule 9 paragraph 5 to the 2015 Act
Outcomes
The appeal was allowed to a limited extent; the penalty was reduced to £6000.
The Tribunal found the Appellant in breach of the regulations but deemed the initial penalty too high considering the mitigating factors (cooperation, compliance, admissions, and lack of prior breach history). The Tribunal also considered the company's financial position, although acknowledging the need for penalties to have a deterrent effect. The method of calculating the penalty reduction was found to be too formulaic and not fully reflective of the specific mitigating circumstances.