Deposit Scheme Woes

This article caught my eye this morning.  The question asked is whether the current deposit scheme is working and whether we should just have 1 scheme.

A lettings industry consultant has called for the existing law on tenancy deposit protection to be revoked, with totally new measures put in place.

Laurence Dillamore says the current system is not working.

He wants the existing law to be heavily amended so the current structure that compels CLG to license two types of scheme disappears.

He says there should be a single licensed body which could, if it chose, provide both ‘insured’ and ‘custodial’ schemes.

He is also calling for that single authority to be empowered to charge a fee for usage when interest rates are low.

Currently, there are three different schemes, including the Deposit Protection Service which provides a custodial service. It is not allowed to charge, but is run on the interest paid on the deposits it banks.

Dillamore has told housing minister Grant Shapps that a single body would mean a single statistical database from which the Government could decide housing policy.

It would also save public money, as CLG would only have to monitor one scheme, not three.

Hitting out at the original procurement process for the insured versions – in which he was involved – he said the process was “profoundly unsatisfactory” and has caused many problems.

He said there was public confusion as to who the insurance schemes indemnify, and that one scheme was making windfall profits whilst the other had faced near ruin.

Dillamore said: “The current three supplier arrangements are confusing, unwieldy and in some cases completely misleading to the point of being unsound. I believe that the changes proposed would be welcomed. However, I have no doubt that there will be considerable adverse comment.”

The deposit scheme works well and will work well as long as everybody abides by the rules...but currently there are a lot of landlords and agents who have decided to ignore the deposit scheme.  So we are not playing on a level playing field.  Would a single scheme make this right?  I am not sure.