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The Real Estate Institute of New South Wales (REINSW) is calling for more power to prevent fraudulent activity in the real estate industry after a string of agents hit the headlines for all the wrong reasons.
Over the last 12 months NSW Fair Trading alone has prosecuted six real estate agents for trust account fraud.
Just last Friday a Hawkesbury-based director was sentenced to 18-months' jail time for stealing over $300,000 from their company's trust account. Another four Victoria-based agents are also facing jail time and according to REINSW deputy president John Cunningham, this is just the tip of the iceberg.
“The writing is on the wall, we’ve known for a long while that this was a major problem and now we are seeing story after story of agents doing the wrong thing and being prosecuted,” he told Real Estate Business.
“This is not a new problem, the reality is that there are a lot of poorly trained agents running businesses because it is so easy to get a license and there is no mandatory ongoing training.”
According to Mr Cunningham NSW Fair Trading and other similar bodies only have the ability to reprimand agents after they have offended. Instead, the REINSW believes the industry can be more proactive.
“Our proposal, which has been put to NSW minister for Fair Trading Stuart Ayres, will provide a level of accountability and professional oversight that follows the tried and tested approach that prevention is better than cure,” he said.
“NSW Fair Trading, with its recourses, is only able to become involved in the conduct of agents when they have transgressed. REINSW wants to become involved in conduct issues before they become a problem.”
This involvement would take shape as a ‘co-regulation model’, which would see REINSW given the power to force all business owners to complete ongoing business training.
The ultimate goal is to have all offices, old and new, participate in the training, Mr Cunningham explained.
Mr Cunningham told Real Estate Business there is already a number of industries who proactively address the issue of fraud.
“The Royal Institution of Chartered Surveyors and the Law Society of NSW are two good examples of industries who are successfully using this co-regulation model,” he explained.
- <p>I understood the Office of Fair Trading is the "industry regulator" with the power under the Act to specify particular topics as "compulsory" for Professional Development - should they deem it necessary. They haven't given any indication (at all) of trust account fraud being a widespread issue in the industry in NSW.</p>0
- <p>how about the agents that steal by stealth, buying listings and then charging 1000s in marketing money, how about them, the amount of agents that steal trust monies is insignificant, then again once a thief always a thief, so no amount of legis will stamp this out. agents already get training in how to steal small amounts of money in marketing and advertising, training in teling sellers the truth in what their vendors home is worth. maybe doing cmas that are real not manipulated.</p>0
- <p>Very interesting comments and great to see the debate open up which is exactly what is needed to get our industry to stand up and resolve these issues. REINSW is helping to facilitate positive change and increasing membership has nothing to do with it, in fact the opposite is the truth . Our agenda is to act on our members mandate to increase standards, improve entry requirements and be more selective on membership</p>0
- <p>It seems clear that one of the major issues is trading whilst insolvent! I have seen 2 local agency's steal from their trust accounts during my time in the industry and we wondered how both were keeping their doors open due to poor reputation, minimal sales and properties under management. It was clear they were going under 2 years before they were found to have stolen funds from their trust account. Perhaps those accountants who declare in company returns that a business is solvent should be looked at closely.</p>0
- <p>This is a matter for the Office of Fair Trading who follow appropriate channels through the court system where people are given an opportunity to defend themselves with proper legal representation. The REI in the various states already have too much control in handing out judgements and punishments to agencies by people who are simply not qualified to do so. Unfair judgements leave members with no option but to cancel their subscription to the REI in their state which is a shame.</p>0
- <p>I am a little puzzled, how can you take against someone before they offend? Also are REINSW suggesting that all agents need training to tell them not to steal money? <br>My kids know stealing money is wrong and they didn't have to do a training program to know it. Sounds to me like nothing more than a shameless membership drive by REINSW. <br>I would think those that are going to steal from their trust account will do so regardless. Maybe tougher penalties and more frequent visits from OFT is a better solution.</p>0
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