867. Schemes to be custodial schemes or insurance schemes.

A tenancy deposit scheme1 must be either a custodial scheme, or an insurance scheme2; and each must comply with the specific statutory requirements that are imposed, as the case may be3.

A 'custodial scheme' is a scheme under which:

  1.  

    (1)     tenancy deposits4 in connection with shorthold tenancies5 are paid to the landlords6 under the tenancies7;

  2.  

    (2)     amounts representing the deposits are then paid by the landlords into a designated account held by the scheme administrator8; and

  3.  

    (3)     those amounts are kept by the scheme administrator in that account until such time as, in accordance with the scheme, they fall to