Trust Breach. Fair Trading.
Two simple phrases that are enough to send most agents into a panicked frenzy. Yet, similarly, like calls from the ATO, there is a rhyme and reason.
Fair Trading has the purpose to ensure that agents are doing the right thing. That members of the public are not being disadvantaged financially as a result of a property professional in any way. Doesn’t sound so bad when we put it like that does it?
Are you one of the unlucky agents this year that received a ‘please explain’ email from a Fair Trading officer in regards to a trust breach? You are not alone. Yet there is no need to grab the tissue box just yet…
The Best Course of Action When Responding to Fair Trading Over a Trust Breach
Explain the error in detail
It is always best to confront the trust breach straight up. Acknowledge the trust breach. List the reasons as to why it it happened.
Cause of Trust Breach: Receipting funds 15 days after received date.
Response: Show what new processes have you implemented since this breach to prevent it from happening again:
- Receipting is now completed by 10.30am daily.
- You have appointed a second person in charge of daily banking.
- You have appointed a 3rd party to reconcile your account etc.
List as many new processes as you can to demonstrate better practice moving forward.
Provide evidence to support your explanation such as copies of:
- Bank statements with transaction highlighted.
- New policy and procedure manual.
- Cashbooks/ledgers and other supporting documents.
Rest assured most agents have received a warning.
What it does mean…
Fines have been issued in several cases.
What it doesn’t mean…
It doesn’t mean that your agency is going to be necessarily shut down (unless you are outright stealing money from clients). It simply means that you need to implement better daily practices. If in doubt on how to implement best practice on your trust accounting processes you can engage us as a partner and take advantage of our support packages. We can provide you with phone/email support on Trust Accounting Compliance/Best Practice, Software Compliance advice and general support.
Jane Morgan is the Director of End of Month Angels, a consultancy firm specialising in Trust Accounting. Jane knows the legislative requirements of running a successful Real Estate office through her 23 years industry experience. Don’t trust just anyone with your trust accounting. Book an appointment with an End of Month Angel today.