Proactive compliance visits - Settlements agents

This publication is for: 
Property industry

Consumer Protection staff organise regular proactive compliance visits to licensed or registered people throughout the state.The visits aim to ensure the laws are followed,help educate what the laws means on a practical level and provide information about changes.

If you would like more information please contact the Consumer Protection Advice Line team on 1300 30 40 54 or by email.

Preparing yourself

Objectives of the program

Consumer Protection has an initiative to “conduct and promote education and provide advisory services for persons who are licensed or registered” under the authority provided by the Settlement Agents Act 1981 “the Act”.

Consumer Protection’s proactive compliance programme aims to encourage high levels of compliance with the requirements of the Act, the regulations and Code of Conduct resulting in:

  • greater understanding by agents of the laws which govern their activities;
  • the achievement of consistently high ethical and professional standards in the industry;
  • fair and open competition because all agents compete on the same “level playing field”;
  • enhanced consumer protection because of high ethical and professional standards; and
  • the delivery to agents of compliance tools including checklists, references, manuals and compliance systems.

How the visit is conducted

A proactive compliance visit includes:

  • meeting with the person in bona fide control of the agency;
  • review of notices and particulars on correspondence and documents;
  • examination of the agency’s trust account and trust accounting procedures;
  • a review of a sample of the agency’s completed settlement files;
  • a discussion with you of the complaints (if any) lodged against your agency;
  • a discussion with you of the training and professional development needs of your agency.

What you will need

To ensure the visit is conducted with the minimum of disruption to your business operations we would be pleased if you would have the following available at the appointed time of our visit:

  • The Licence, Triennial Certificate and Business Name Registration Certificate displayed [Section 42(1)(a) & (b)]
  • A copy of the agency’s letterhead [Section 42(2)(a) & (b)]
  • A printed copy of the Form 1 appointment to act documents used in your agency
  • Your trust account bank statements and reconciliations for the previous 3 months
  • Your trust account cheque book and receipt book
  • The Form 2 Disclosure Form (if applicable)
  • Current copies of the Settlement Agents Act 1981, Regulations 1982 and Code of Conduct 1982 as amended
  • A sample of identity checks recently conducted by your agency
  • The last audit report from your agency’s auditor.

We will select a sample of your settled files for inspection during our visit.

As a minimum you should review the following prior to the visit:

Proactive visit checklist

A copy of the official checklist form can be emailed to you on request when the visit booking is made. The checklist covers the following items:



Proactive compliance checklist - Settlement agents
Description Legislation
LICENSING
Check complaint database prior to visit to ascertain any deficiencies in operations - open complaints. Check audit report - check details of any management letter issued by auditor. Auditor current.  BP & SA Act s.51 & s. 70
Agency Licence and Triennial Certificate displayed.  Business Name Registration current. 
For branch office: check name of manager and address of licensees office is shown.
SA Act s42(1)(a) & (1)(b)
Does the agent have a current certificate of fidelity and professional indemnity insurance together with a current triennial certificate - review value of settlements to check adequacy of cover. SA Act s35(6)
Do correspondence & documentation identify the licensee & the registered office, & that the agent is a settlement or business settlement agent or both.  
For a branch office: check manager is identified as a settlement agent & branch office address shown on correspondence.
SA Act ss42(2)(a) & (2)(b)
COSTS DISCLOSURE
Is a written costs disclosure provided to clients before being appointed. Does the service amount disclosed include general office disbursements. SA Code
r.23
Unforeseen significant change. Are clients informed in writing and did they agree to the change.  Is the amount reasonable. SA Code
r.24
E-CONVEYANCING
Has agent subscribed to Property Exchange Australia (PEXA). If so, who has 'Subscriber Manager' and 'Signer' rights? SA Code r.15
Has a 'Client Authorisation Form' been completed, signed and retained. SA Act s.46 & Sch 2
Has the settlement completion record been printed and retained for each transaction. SA Code r. 32
TRUST ACCOUNT(S)
Has the trust account been correctly designated - cheques and bank statement(s).
Have any interest bearing trust accounts (IBTAs) been opened - account correctly designated and client's written request held on file.

SA Act s.49A, 49A(1) & 49(6)(d) &

SA Regs r 6B

Do trust account receipts comply with the Regulations. SA Act s50 & SA Regs r 6E
Check a sample of receipts to verify banking by the next business day. SA Act s.49(1)
Are the trust account(s) - including IBTAs - reconciled on a monthly basis (to the last day of the month), reviewed and certified by BFC within 10 working days.  SA Act s49(6)(d) & BP
Is the BFC proficient in performing bank reconciliations - and therefore understands the information available in the EOM trust accounting reports. SA Code
r. 12 & r. 32
Check all ledgers to see how long balances are held in trust and the reasons why.  Does agent follow up on unpresented cheques and take appropriate action to deal with those monies? SA Code r. 7 & r. 10
Check system of accounting – manual or computer system. Note accounting system name. SA Code r. 7, r. 10 & r. 32
SETTLED FILES - Acting for seller
Does the agent have valid appointments to act - Form 1. SA Act s.43(2)
Are the appointments to act endorsed with agent’s acceptance (when signed) & a true copy provided to the client (agent should not wait until file is unconditional) SA Code r.26
Is the agent using a Form 2 for conflict of interest disclosures where applicable. SA Act s.46(3) and s.47(3) SA Code r.17, r.18, r.19, r.20 and r.22
Is all work completed in a timely & efficient manner e.g. First letter issued to client. SA Code r.7, r.10 and r.29
What systems are in place for the control and supervision of staff. Does the agent review files. SA Code r.15 and r.16
Check VOI is completed - ASIC searches completed to ascertain appropriate signing parties for Pty Ltd entities; Power of Attorney obtained and retained on file, etc. Is the agency's VOI procedure documented for staff/new employees to refer to. SA Code r.29
Does agent ensure searches are obtained as soon as practicable after receiving instructions to act e.g. CT; ASIC; encumbrances; enquiries to government offices. SA Code r.11 and r.29
Foreign resident capital gains withholding (2M and over). If applicable, was a clearance certificate obtained from seller and provided to buyer's settlement agent.  SA Code r.11 and r.29
OFF THE PLAN SALES (randomly selected)
Does the agent have valid appointments to act. (Registered Proprietor as per Certificate of Title) SA Act s.60(1)(b), 60(2)(a)(i) & (ii)
Is the vendor/developer the proprietor? Developers who are not the proprietor can now sell one or more lots in a subdivision, including strata subdivisions provided contracts comply with new provisions in SOLA. SOLA s.13
Is the deposit paid into settlement agent, real estate agent or a solicitors trust account? (Funds should be held in trust until plans have been registered. BP for funds to be held in trust until titles have been issued) ST Act s.70
BUSINESS SETTLEMENTS
Were necessary searches and inquiries made - ASIC (company check and business name transfers), licenses, permits, inspections etc. SA Code R.29
Does agent search the Personal Property Securities Register (www.ppsr.gov.au). SA Code r.11
Were sellers disclosure statements and deed of restraint obtained/provided. SA Code r.11
Were lease reassignments obtained from lessor's agent, if relevant. SA Code r.11
Were stocktakes completed, if relevant, and any required adjustments agreed and made. SA Code r.11
Check if post-settlement retentions were addressed (paid out) within the time specified in the contract. SA Code r.7 and r.10
SETTLED FILES - Acting for buyer
Does the agent have valid appointments to act (Form 1). SA Act s.43(2)
Is the agent using a Form 2 for conflict of interest disclosures where applicable. SA Act s.46(3) and s.47(3) SA Code r.17, r.18, r.19, r.20 and r.22
What searches were undertaken and when - e.g. initial/check search prior to settlement/post settlement search. Check: Electronic Advice of Settlement (EAS) & s.43 strata certificate if applicable, were issued - date/s. Check that a copy of the title; s43 Certificate; sewer plan; and Land Purchase Enquiry was provided to buyer. SA Code r.11 and r.29
Foreign resident capital gains withholding (2M and over) Clearance certificate not provided by seller. Form 1 (Payment Notification) provided to buyer and information entered by SA. SA Code r.11 and r.29
Do any contracts relate to Sub Purchaser, Trustees and Superannuation funds - were documents obtained to confirm signing party. SA Code r.11
SETTLED FILES - Acting for both parties
Is the agent ensuring correct election by client and correct disclosure made, are they clearly shown on appointment to act (Form 1). Is the agent obtaining a Disclosure Notice (Form 2) signed by the seller and the buyer. SA Act s46(3)
Check for any conflict of interest issues. Does agent obtain written consent to continue to act or cease to act for both parties. Are both clients interests protected. SA Code r.18 and r.19
Check what searches were made and copies retained i.e. Initial/Check/Post Settlement. SA Code r.29
 
 
Consumer Protection
Fact sheet
Last updated 14 May 2019

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