Proactive compliance visits - Settlements agents

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file type icon Settlement agents compliance self-assessment checklist

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

The following checklist will help you prepare for a proactive compliance visit:

Proactive compliance checklist - Settlement agents
Description Legislation
LICENSING / RECORDS
Is the agency licence and triennial certificate displayed? SA Act s.42(1)(a)
For branch office, is the name of manager and address of registered office of the licensee displayed? SA Act s.42(1)(b)
For branch office, is the branch manager identified as a settlement agent and the branch address shown on all correspondence and documents? SA Act s.42(2)(b)
Is the business name registration current? SA Act s.41
Do you have a current certificate of fidelity and professional indemnity insurance (PII) together with a current triennial certificate? SA Act s.35
Is the PII cover adequate taking into account the value of settlements undertaken? SA Act s.35(3)
Does correspondence and documentation identify the licensee and the registered office and that you are a settlement or business settlement agent or both? SA Act s.42(2)(a)
 
COSTS DISCLOSURE
Is a written costs disclosure provided to clients prior to appointment? SA Code of Conduct (Code) r.23
Does the service amount disclosed include general office disbursements? Code r.23(3)
Are clients informed in writing of unforeseen significant change and did they agree to the change? Code r.24
Is the amount reasonable? Code r.24(2)(b)
 
E-CONVEYANCING
Have you subscribed to Property Exchange Australia (PEXA)? SA Act Schedule 2 cl.1(2A)
Have you considered appropriately who has ‘Subscriber Manager’ and ‘Signer’ rights? SA Act s.46(8)m
Schedule 2 cl.1, cl.2A
Code r.15, r.16
Do you have processes in place to that ensure that only authorised personnel have access? Code r.15, r.16
Has a ‘Client Authorisation Form’ been completed, signed and retained for each transaction? SA Act s.46(8), s.46(9)
Schedule 2 cl.1(2A)
Has the settlement completion record been printed and retained for each transaction? SA Act Schedule 2 cl.1(2A)
Best Practice (BP)
 
TRUST ACCOUNTING
Are trust accounts, cheques and bank statement(s) designated in accordance with the SA Regulations? SA Act s.49(1)
SA Regs r.6B(1), r.6B(2)
Are interest bearing trust accounts (IBTAs) correctly designated? SA Act s.49A(1)
SA Regs r.6B(3)
Are client’s written requests held on file? SA Act s.49A(2)
Do trust account receipts comply with the Regulations? SA Act s.50(1), s.50(2)
SA Regs r.6E
Is banking being done by the next business day and can this be verified? SA Act s.49(1), s.49(6)(b)
Are trust account(s), including IBTAs, reconciled on a monthly basis (to the last day of the month)? SA Act s.49(6)(d)
BP
Do you review and certify them within 10 working days? SA Act s.49(6)(d)
BP
Are you proficient in performing bank reconciliations and able to understand the information available in the EOM trust accounting reports? Code r.5, r.7, r.32
Are there valid reasons for any amounts being held beyond settlement date? Code r.7, r.10, r.32, r.33
Do you have procedures to follow up on unpresented cheques and take appropriate action to deal with those monies? Code r.7, r.10, r.32, r.33
Do you have an adequate accounting system that is fit-for-purpose? Code r.7, r.10, r.32
 
SETTLED FILES: Acting for the seller
Do you have a valid appointment to act, Form 1? SA Act s.43(1), s.43(2)
SA Regs r.6AA
Code r.26
Are the appointments to act endorsed with agent’s acceptance (when signed) and a true copy provided to the client?
(You should not wait until file is unconditional to do this)		 SA Act s.43(2), s.47
Are you 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 and efficient manner e.g. when is first letter issued to client? Code r.7, r.10, r.29
Do you have adequate systems in place for the control and supervision of staff? Code r.15, r.16
Do you review files? Code r.15, r.16
Is Verification of Identity (VOI) completed? Code r.15, r.16, r.29
Are ASIC searches completed to ascertain appropriate signing parties for corporate entities; Power of Attorney obtained and retained on file, etc.? Code r.15, r.16, r.29
Is the agency’s VOI procedure documented for staff/new employees to refer to? Code r.15, r.16, r.29
Are searches obtained as soon as practicable after receiving instructions to act e.g. CT; ASIC; encumbrances; enquiries to government offices? Code r.7,r.10, r.29
If the foreign resident capital gains withholding ($750k and over) is applicable was a clearance certificate obtained from seller and provided to buyer’s settlement agent? Code r.7, r.11, r.29
 
OFF THE PLAN SALES (randomly selected)
Do you have valid appointments to act?
(Registered Proprietor as per Certificate of Title)		 SA Act s.43(1), s.43(2)(a)
Code r.29
Is the vendor/developer the proprietor? Sale of Land Act s.13
Is the deposit paid into a settlement agent, real estate agent or a solicitor’s trust account? Strata Titles Act s.70
 
BUSINESS SETTLEMENTS
Were necessary searches and inquiries made e.g. ASIC (company check and business name transfers), licences, permits, inspections etc.? SA Act s.47
Code r.29
Do you search the Personal Property Securities Register (www.ppsr.gov.au)? Code r.6, r.11
Were sellers disclosure statements and deed of restraint obtained/provided? Code r.6, r.11
Were lease reassignments obtained from lessor's agent, if relevant? Code r.6, r.11
Were stocktakes completed, if relevant, and any required adjustments agreed and made? Code r.6, r.11
Are post-settlement retentions addressed (paid out) within the time specified in the contract? Code r.7, r.10
 
SETTLED FILES: Acting for the buyer
Do you have a valid appointment to act? (Form 1) SA Act s.43(1), s.43(2)
Code r.23, r.26
SA Regs Schedule 1 Form 1
Are you using a Form 2 for conflict of interest disclosures where applicable? SA Act s.46(3), s.47(3)
Code r.17, r.18, r.19, r.20, r.22
SA Regs Schedule 1 Form 2
Do you undertake searches in a timely manner? Code r.10, r.11, r.29
Were initial/check searches undertaken prior to settlement? Code r.10, r.11, r.29
Was a post settlement search undertaken? Code r.10, r.11, r.29
If applicable was an Electronic Advice of Settlement (EAS) and s.43 strata certificate issued and on what date/s? Code r.10, r.11, r.29
Was a copy of the title; s.43 Certificate; sewer plan and Land Purchase Enquiry provided to the buyer? Code r.11, r.29
If a foreign resident capital gains withholding ($750k and over) Clearance Certificate was not provided by a seller, did you enter information into a Form 1 (Payment Notification) and provide the document to the buyer? Code r.11, r.29
Did you obtain documents to confirm the signing party for contracts related to sub-purchasers, trustees and superannuation funds? Code r.11, r.29
 
SETTLED FILES: Acting for both parties
Are you ensuring correct election by is being made by your client and that correct disclosure is being made? SA Act s.46(3)
Code r.17, r.18, r.19, r.20, r.22
SA Regs Schedule 1
Are the disclosures clearly shown on appointment to act (Form 1)? SA Act s.46(3)
Code r.20, r.22(1)
SA Regs Schedule 1
Are you obtaining a Disclosure Notice (Form 2) signed by the seller and the buyer? SA Act s.46(3)
Code r.17, r.18, r.19, r.20, r.22
SA Regs Schedule 1 Form 2
Have you identified any conflict of interest issues? Code r.18, r.19, r.22
Do you obtain written consent to continue to act or cease to act for both parties? Code r.18, r.19, r.20
Are both client’s interests protected? Code r.18, r.19
Are copies of searches made retained on file i.e. initial check / post settlement? Code r.29
 
 
Consumer Protection
Fact sheet
Last updated 11 Oct 2019
First published 07 Mar 2014

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