I let a house to two students each year and have done so for 3 years, a total of 6 students. I collect their deposit and then deposit it in the dps. This is time-consuming but not difficult; the problem comes with trying to collect for damages and returning the remaining deposit.
The red tape is unfriendly, to say the least. Of the 6 students, 2 have not yet collected their deposit after over a year, despite remindings from myself. Their money just sits there in the dps account, so who gets it in the end??? Had the government not go involved, I would have just deducted it from the last months rent, and thus ended the matter with NO red tape.
On the other hand, collecting for damages is even more difficult. With my last tenant who badly burnt the carpet, I ended up negotiating directly with the tenant, he gave me £80 directly, and then I helped him claim the £200 back, as this was easier than using the deposit protection scheme.
I know that corrupt landlords exist, but the scheme doesn't help their tenants as they simply don't use the dps. My son recently had to go to court to get his deposit back from his landlord who just didn't deposit the money in the scheme.