The Minister for Better Regulation has called into question the body which trains agents who are trusted with the sale of properties.
The long-running rift between the state’s most powerful real estate lobby group and Fair Trading has deepened after the Real Estate Institute leveled serious accusations of gross negligence and regulatory backflips at the state’s consumer regulator and the minister.
But in an extraordinary turn of events, Better Regulation Minister Matt Kean has written an explosive letter to institute president Leanne Pilkington, and questioned whether it remains a fit and proper body to train agents.
In his letter, Mr Kean strongly defended Fair Trading and expressed serious concern regarding the increasing levels of non-compliance within the real estate industry.
The number of enforcement actions has increased from 199 in 2016 to 442 in 2018 so far. Mr Kean said underquoting was a particular concern and it was highlighted by the increase in enforcement actions.
Mr Kean demanded Ms Pilkington confirm the institute’s processes, including how it deals with members who have not complied with the law, as well as confirming the number of members who have been expelled or suspended in the past three years.
The minister’s intervention was prompted by the institute launching calls for a parliamentary inquiry into the decision-making processes of Fair Trading because of several industry reforms including recent changes to tenancy laws.
The institute claimed the regulator removed the requirement for agents to lodge trust account audits against their lobby group’s advice, causing millions of dollars worth of fraud.
“Fair Trading have removed what they believe is ‘red tape’. Unfortunately, their ‘red tape’ are consumer protection procedures and processes,” said Tim McKibbin, the institute’s chief executive.
“The cost of these decisions can be counted in the millions of dollars, and continue today to expose consumers to unnecessary risk.”
The institute claimed Fair Trading reversed its own decision on trust account audit requirements after Nicolette van Wijngaarden, a real estate agent specialising in luxury properties, was charged with fraud. Fair Trading alleges she obtained a financial advantage by deception to the sum of $3.6 million, which it claims is the largest amount ever detected.
“With one strike of a pen – and despite strident opposition from the institute – Fair Trading removed all the protection of an independent audit,” said Mr McKibbin.
“It created the ludicrous situation where only agents who had behaved fraudulently needed to notify Fair Trading that their audit had identified their fraud, and as a result, incidents like the van Wijngaarden case and others cost consumers millions of dollars.”
Mr McKibbin believed this was one example of dangerous decisions made at Fair Trading. He also claimed that Fair Trading would be de-licensing auctioneers as they viewed auctions as “simply a theatrical performance”.
“I implore the NSW government to urgently commission a parliamentary inquiry into Fair Trading’s policy and decision-making processes,” Mr McKibbin said. “Fair Trading continue to make decisions regarding the property market, property services industry and consumer with no subject matter knowledge, competencies or experience.”
Mr Kean said it was highly concerning that so many errors of fact had been made by Mr McKibbin and that called into question the institute’s status as a training provider for estate agents.
He said people could infer from Mr McKibbin’s statements that the institute did not understand the legal obligations of its members or was trying to deliberately mislead the public.
“A finding of either of these things would raise serious questions over whether the REINSW is a fit and proper person to provide continuing professional development,” Mr Kean said in his letter. “Accordingly, I ask that you please provide me with an explanation of these inaccuracies within 14 days.
“Setting aside the obvious error that Fair Trading did not amend the law, the NSW Parliament did, the claim that the amendment referred to ‘removed all the protection of an independent audit’ is incorrect – audits are still required and auditors are required to lodge reports where they identify a financial irregularity.”
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