Guidelines for Supervision

Brian Cannan: Hi, I'm Brian Cannan and today I've got Andrew Coulson from Think Real Estate with me. How are you Andrew?

Andrew Coulson: Well Brian how are you?

Brian: Good, you and I are going to discuss the supervision guidelines set down by Fair Trading. And these guidelines are set down to allow principals to understand how they're supposed to supervise their staff.

Andrew: Yeah the government makes it very, very clear that the principal of the office is responsible to supervise the actions of everybody within the office. Their role is not as a salesperson or a manager or a property manager. Their job is to supervise the actions of their staff in a similar way to a way a parent would supervise their child.

Brian: Yes, and the first one they talk about is banking of trust money. What would you recommend they'd have of banking of trust money?

Andrew: Well, most offices have a policy that we're going to bank the money as soon as we possibly can. The supervision guidelines say that we must have written banking procedures within our policies. So that might be just a line that says, We will deposit all trust money within our bank account by three o'clock on the next business day.

Brian: Would you also have a checklist for the person who did it, so you could supervise them knowing that they're doing it the right way?

Andrew: Exactly. So that you can demonstrate that you are following the policies and procedures. So the first step is to make the policy. The next step is to be able to demonstrate that that policy is being implemented.

Brian: Well the second guideline I think most owners of offices will know about, that they have to do a monthly review of the trust account cash flow.

Andrew: Yeah, so the Act requires that we do it at least by the 21st day of the end of the month. Most agents know that if they wait that long, it becomes complicated and most agents do it within, some do a daily, others will do it every week. But we must have written in our policies when we are going to do it. So a safe policy would be to say that we would reconcile it by the end of the month, or within two days of the end of the month, and the licensee in charge will sign off on all reconciliations within two days.

Brian: They're got to do more than sign off don't they?

Andrew: They do.

Brian: They really do need to check it these days.

Andrew: That's correct. It's not just a tick and flick exercise. They are responsible for every dollar within the trust account. So it's a matter of going through and ensuring that every dollar is accounted for.

Brian: They could do some tests, the deposit going through to the journal and looking at the bank statement. They should be following some of them right through, shouldn't they?

Andrew: Exactly right. And they might be doing other things during the month like spot checks or test audits or those sorts of things. You wouldn't just wait till the end of the month to try and find out if there's a problem you would regularly review your trust accounts and keep those in order. But the supervision guidelines just require us to have that written policy that says when we are going to reconcile our accounts.

Brian: Another part of the supervision guidelines is that you must have procedures of how your staff are going to arrive at the true estimates.

Andrew: Yes it's a big thing quoting of prices and establishing a likely selling price for the property and agents are to demonstrate in quite comprehensive detail how they arrived at that estimate of selling price. Records need to be kept as to how they achieve that price. And they include checklists and forms that may need to be completed so that it's easy to demonstrate that estimate.

Brian: Andrew, also under supervision guidelines, the salesperson needs to be able to substantiate about beneficial interest, and...

Andrew: Any disclosures, the nature of advertising, so that they can demonstrate that they're not misleading in their advertising. Again, the principal may provide checklists and forms that the sales people will need to complete, to show that they haven't been misleading, that they have no beneficial interest.

Brian: And no conflict of interest.

Andrew: And no conflicts of interest. So those checklists should be in each file, as well as being written within the policies and procedures of the office.

Brian: And importantly, the representative looking after that property has to sign off and date that checklist.

Andrew: That's correct. And good office policy will be that no property is advertised until somebody within the office supervises and checks off on that file.

Brian: Another one is the complaint register. How's that work?

Andrew: Again, it doesn't have to be complicated system. It may be a manila folder with complaints written on it. But it's we need to have some form of policy. So if some member of the public does have a grievance, they can get in touch with the office and there is a system where their grievance can be answered. So it may be just some complaints form that they can fill out, and how it's going to be addressed by the manager.

Brian: If there's a complaint about the staff.

Andrew: That's correct. That's correct.

Brian: But if there was complaint about any finance or money, who handles that?

Andrew: That needs to be handled by the licensee in charge that must be handled by them. And obviously, there are very, very tight laws and restrictions around that handling of trust money.

Brian: Most definitely. Now, the other one is that they should have some sort of review system to review all that we've talked about and all the policies and procedures and how often should they do that?

Andrew: Ideally, it would be done every year or whenever any legislation is changed. The regulators sometimes change their guidelines whether it be around price substantiation or advertising.

Brian: Or quoting.

Andrew: Or quoting. So it would be a good idea as soon as we learn what the new regulations are around those, that we also review our policies and procedures to take account of those changes.

Brian: Excellent. Thank you, Andrew. If you have issues with compliance, we have systems and procedures that you can implement in your workplace right now to make you compliant. And if you want, we have CompCheck and that's where we come out to your office and make sure you're completely compliant with supervision guidelines. So give us a call.


Think Real Estate has developed a set of procedures, checklists and forms to help Licensees in charge comply with the NSW Fair Trading legislation. This comprehensive manual is available to purchase now - click here for Think Real Estate's Supervision Guidelines Manual.