The Association of Residential Lettings Agents (ARLA) is introducing a licensing scheme for its UK members, as well as a code of practice.

The new guidelines are aimed at protecting tenants and homeowners who use letting agents.

Members of ARLA's scheme will have to adhere to a number of criteria, including:

• Hold a professional qualification relating to lettings
• Take part in continuing professional development
• Have professional indemnity insurance.
• Have plans in place to protect any money they are holding for clients
• Have an annual independent audit carried out on clients' funds

Under the scheme, if a licensed agent went out of business any money owed to clients would be protected.

The National Association of Estate Agents plans to introduce its own licensing scheme later this year.