Summary of Licensee Business Supervision Guidelines

25 Aug 2023

Avoid Fair Trading Pitfalls

Our legal partner, McLachlan Thorpe Partners, has alerted us of Fair Trading’s active enforcement of guidelines for business supervision under section 32 of the Property, Stock and Business Agents Act, 2002.

Some agencies have already experienced unannounced inspections by Fair Trading officers, who have requested compliance with these guidelines.

Overview of Legislation

Section 32 (3) outlines three specific requirements, relevant to sections 32(1) and 32(2), regarding the licensee’s responsibility to effectively supervise:

  1. Supervising employees engaged in the business
  2. Establishing procedures aimed at ensuring compliance with the provisions of the Act and any other applicable laws related to business conduct,
  3. Monitoring business conduct to ensure, to the best extent possible, adherence to those procedures.

The Requirements

Regarding section 32(4), these guidelines outline proper business supervision for licensees. While licensees are accountable for actions of their employees, some functions can be delegated. Requirements include:

  • Licensee needs written staff instructions for daily banking practices regarding trust money. Proven employee compliance process is essential.
  • Monthly review of trust account cash flow is mandatory, validated against bank records.
  • Clear procedures for substantiating price estimates, referencing Commissioner’s Estimated Price Guidelines.
  • Listing agents must use property sales checklist, ensuring accurate advertising, conflict disclosures, and awareness of property interest restrictions.
  • Documented complaint procedures needed, including recording staff-consumer issues, with financial complaints managed separately.
  • Required documentation (procedures, checklists, reviews) must be able to be produced for authorised officers as per Section 105 of the Act.  Regular usage and maintenance proof are required.

Penalty for Non-Compliance

Failing to comply with the guidelines within section 32(1) or section 32(2) will result in a penalty not exceeding 200 penalty units ($22,000) for corporations, or 100 penalty units ($11,000) in any other case.

Disciplinary Action

Violating section 32 can lead to action under Act section 191(a), affecting current or past license or registration holders.  Failing to adequately supervise a business could result in action under Act section 191(e), challenging the licensee’s suitability for business involvement. Section 191(e) enables action due to being unsuitable for directing or managing a licensee’s business.

For full details see the Secretary’s guidelines on licensee business supervision under Property and Stock Agents Act 2002, section 32.

Download Supervision Guidelines

To learn more about our legal partner McLachlan Thorpe Partners and their areas of expertise head to their website.

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