When a landlord or Letting agent takes a deposit from the tenant they are legally required to provide to the tenant information pertaining to how the money is protected within a 14 day period.
If it is proven in the court that they have not complied, the repercussions for the landlord are that they will be ordered to pay the tenant 3 times the deposit as a penalty. The landlord is also likely to have to repay the original deposit and compensation, all this within 14 days of the verdict.
This is exemplified in a case in June 2008 brought before the Court in Cardiff…
The letting agent was guilty of failure to protect the tenant’s deposit in a valid scheme and the landlord had to pay the tenant compensation. This amounted to three times the tenant’s deposit of £900 (£2700) plus costs, and a refund of the original deposit of £900!!
In this particular case the landlord may not be directly to blame, perhaps being misled by the letting agent and would have to take legal action against the letting agent to recover their loss.