Do managing agents still need fidelity cover?

[Updated: 19 January 2026]

Yes, managing agents definitely need their own fidelity cover.

The PPRA (Property Practitioners Regulation Authority), notwithstanding that a property practitioner holds such a fidelity fund certificate, also recommends that fidelity cover be taken out by the practitioner.

See the PPRA website, where it states:

“No claim against the fund would lie if, for instance, a non-estate agent cashier steals money that has already been paid by the estate agent into a trust account. In such cases, the claimant has a claim against the firm itself or the cashier personally. It is for this reason that the Board recommends that all estate agent firms should duly assess risk and take out insurance cover to provide for these eventualities”.

As previously stated in the relevant section on the old EAAB website:

“An estate agency business is not entitled to recover any loss from the fund if the business has been held liable to pay compensation to a member of the public because of the theft committed by an employee agent. Firms should, again, assess the risk and take out the necessary fidelity insurance policies to cover any such loss.”

There are certain instances where they will not cover the public, one being where a staff member of the managing agency or estate agency commits fraud or dishonesty.

While we recognise that it is now compulsory for bodies corporate to purchase a minimum amount of fidelity cover to protect themselves against fraud or dishonesty by trustees, employees, as well as their managing agents, this only protects the body corporate and not the managing agent.

The managing agent may actually be exposed to a higher risk where a claim is instituted for fraud or dishonesty. In such a case, the insurer will most likely seek recourse against the managing agency and its implicated employees.  Owners of managing agencies should be more concerned about protecting their entities against instances like these.

Besides managing agencies and bodies corporate arranging their respective fidelity insurance, managing agents should ensure that they have strict checks and balances in place. With excellent management systems available, such as cloud-based products like BCMTrac and WeconnectU, it allows for more transparency, better record-keeping, and secure access to information.

Inexperienced trustees may unwittingly appoint managing agents who offer attractive service levels but lack the necessary depth of experience, infrastructure, systems, and appropriate fidelity cover. In some instances, even established insurance advisers are replaced during a regime change, not due to any deficiency, but simply for the sake of change. Abrupt transitions made without proper consideration can expose the scheme to unintended consequences, including gaps in fidelity protection and the loss of embedded or unseen cover previously provided under the outgoing managing agent’s arrangements.

In summary: trustees are well advised to work with a reputable and experienced managing agent, one with proven systems and resources, appropriate professional indemnity and fidelity cover, and a clear commitment to managing risk responsibly.