Question to the Ministry of Housing, Communities and Local Government:

To ask the Secretary of State for Housing, Communities and Local Government, what evidence underpins the current proposal to remove insured tenancy deposit schemes from the reformed tenancy deposit protection system.

The proposed removal of the insured schemes is based on the objective of ensuring that tenant deposits are as safe as possible.

Under the custodial system, money is held by the Tenancy Deposit Protection provider as a neutral third party. Under the insured scheme, there is an inherent power imbalance against tenants given the landlords and letting agents hold the deposit.

The custodial scheme provides tenants with more confidence to challenge deposit deductions and use the Alternative Dispute Resolution service provided.

There is growing evidence that the insured model also carries a higher fraud risk, with incidents of exploiting insured registration being reported. When agents fail to maintain insurance or Client Money Protection cover, reimbursement for losses can also be delayed, leaving tenants exposed.