In a custodial scheme, your deposit money is transferred to the scheme itself, which holds it in trust until the tenancy ends. Your landlord doesn't keep the money. This gives you an additional layer of security because the scheme controls the funds and will only release them when both parties agree on how the deposit should be divided, or after an adjudicator makes a decision through the alternative dispute resolution process.
The DPS is the main custodial scheme in England and is free for landlords to use. At the end of the tenancy, both you and your landlord log into the scheme's system and confirm how the deposit should be split. If you agree, the money is released accordingly. If you disagree, either party can raise a dispute for free adjudication.
The alternative is an insured deposit scheme, where your landlord keeps the deposit money but pays a fee to the scheme for insurance protection. Both types are legally valid and provide the same level of protection through adjudication.
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