My landlord has not put our money in a deposit scheme?

We have returned from abroad and needed to rent somewhere pretty quickly. When we found the property, we were told we had to pay 3 months rent up front, one of which would be put into a deposit scheme. When it came to signing the leases, we were told that they wouldnt be putting any into a scheme, but keeping it themselves incase we fell behind with the rent. We didnt question it at the time, due to the fact we had to move in that day, but is this right? Should our money be kept in the scheme by law? Thanks

The whole point of the deposit scheme is to have it there ready IN CASE you get behind with the rent/cause damage.
If you don't then the money should be returned to you when you leave.
I know the law regarding this issue has been under review - I think it is actually in effect now in the uk for your protection - but it may not have come into effect yet.
I had only sort of noticed it in passing as I no longer rent but remember thinking that it would have been nice to get my "key money" (like yours three months), back when I left.
There are lots of dodgy landlords/agents out there who would refuse the return of the key money - despite it being in the tenancy agreement- for trivial reasons, which is why the new legislation was created. I've just checked and CAB says it is law that it be returned to you when you leave.
You may want to check out their website for more info.

If you are renting from a corporation like an apartment, it should be kept in an account at a financial institution. If you are renting from an individual like grandma/grandpa jones, there is no law..she can put the money under the mattress if he/she chooses..not a good idea, but he/she can.

by law a 'deposit' needs to be placed into a secure account to cover damage, non payment of rent etc - check with CAB or ask in any letting agency, they will tell you exactly what the landlord should have done.

Yes it should:
http://www.direct.gov.uk/en/TenancyDepos…

if you paid for 3 months in advance, they can do whatever they want with teh money

Really it should be, but its not law.