Why the topics of Rental Bonds Online and Proper Supervision collide in your agency

30 May 2017
Estate Agents Co-operative

This last week we received a call from a Licensee-In-Charge that had been contacted by NSW Fair Trading regarding a potential breach within their office. What has come to light from the communication with Fair Trading is that it appears a number of rental bonds have not made their way to being correctly lodged with the Rental Bond Board.

Now this is a really sad state of affairs, as this is a good agency that does focus on being compliant. However, it is also a large agency and they have put their trust in their staff to do the right thing. Unfortunately, they have been let down by the actions of one person.

This is not a new issue for the industry. This is something that occurs more often than we would like to believe, and is one of the very clear reasons as to the motivations of NSW Fair Trading in introducing the Rental Bonds Online service.

A shocking example

We at the College discuss one case in training, on a regular basis, that went before the Administrative Decisions Tribunal. In this matter, a property manager had not lodged and had misappropriated 119 rental bonds over a two year period, and the Licensee-In-Charge did not know until Fair Trading conducted a spot audit on the business.

Unfortunately, trust within an agency setting is a double-edged sword. You must trust the people you employ and work with, however that same trust caused the agent mentioned in this case to lose their licence for a period of five years. Wow – that’s gotta hurt!

Obviously there is a little more to this case than just an abuse of trust. The Licensee-In-Charge didn’t lose their licence because rental bonds weren’t lodged, they lost their licence because they were not properly supervising their agency.


Part of the role of the Licensee-In-Charge is to ensure there are policies and procedures in place for each position within the agency, and that there is a level of supervision that would satisfy the section.

32 proper supervision rules:

32 Duty of licensee and person in charge to properly supervise business activity

  1. A licensee must properly supervise the business carried on by the licensee.
  2. A licensee employed by another licensee (the principal licensee), as the person in charge of business at a place of business of the principal licensee, must properly supervise the business of the principal licensee carried on at that place.
  3. The requirement to properly supervise the conduct of business includes the following requirements:
    1. a requirement to properly supervise persons engaged in the business
    2. a requirement to establish procedures designed to ensure that the provisions of this Act and any other laws relevant to the conduct of that business are complied with, and
    3. a requirement to monitor the conduct of business in a manner that will ensure as far as practicable that those procedures are complied with.

Get it right, sleep at night

To best method to properly supervise your business and provide a level of protection not just for your agency but also for your clients, is to ensure that your agency is using the Rental Bonds Online service. We understand that the service may not be perfect, as some agents have provided us with some very real feedback about the usability of the service on an agency’s behalf, however it is the best way to remove cash from the agency and — unfortunately, where necessary — remove temptation. And as with every electronic system, it will get better as time goes on. We, of course, highly recommend that it is essential that every Licensee-In-Charge does a check at month-end to reconcile the number of properties that they have currently rented and the number of bonds being held by the Rental Bond Board – a very quick and easy check that could save you a truck load of headaches.

‘Til next time,

Wishing you every success in your business ventures,

Rosy Sullivan

Australian College of Professionals is EAC’s training partner.

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