A compulsory scheme is to be introduced for property and letting agents aimed at safeguarding the cash of tenants and landlords.

The move will protect customers' money, such as deposits or rents, against theft, fraud or if a business goes bust.

The Government is to make membership of the client money protection (CMP) scheme mandatory for letting and managing agents, following the recommendations of a House of Lords working group.

Labour frontbencher Baroness Hayter of Kentish Town said: "We will now see safeguards put in place to ensure that any rent paid via a lettings agents must be held in a separate bank account.

"This will protect tenants and landlords should an agent go bust or make off with the money."

Letting agent Northwood, which has a branch in Carlisle, is delighted at the decision, but is reminding consumers that mandatory CMP is not yet law, and their finances are at risk if their chosen agent does not have client money protection.

Manager Gordon Adamson said: “It’s wonderful news that the Government will make CMP mandatory, but it isn’t in place yet.

"That means both landlords and tenants are still at risk of losing money. It is so important that consumers understand that they need to choose their agent wisely by asking if they are part of a CMP scheme before entering into a contract with them.

"They should always look for the SAFEagent logo, an easily identifiable consumer mark denoting agents subscribed to a Client Money Protection scheme."