By Cath Dickinson
NSW Fair Trading has released a Statement of Regulatory Intent setting out that their overall approach to compliance with the industry reforms for the next six months will be to educate, rather than enforce and penalise.
Preparing and implementing systems, processes and procedures to ensure compliance with the industry reforms that commenced on 23 March 2020 was always going to be a substantial task – one that has now been exacerbated by the COVID-19 pandemic.
“At the same time as we’re working to implement the industry reforms, we’re also coming to grips with the new operating environment we find ourselves in due to the coronavirus,” REINSW CEO Tim McKibbin said. “Agencies are keenly focused on responding to the impact of social distancing and strict business restrictions. To also ensure compliance with the industry reforms, now and in the coming weeks and months, is an almost impossible feat for many.”
Education, not enforcement
Recognising the challenges facing the real estate industry at this time, NSW Fair Trading released a
Statement of Regulatory Intent announcing their intention to focus on education, rather than enforcement and penalty for the next six months.
The Statement applies to new regulatory obligations under the Property and Stock Agents Act 2002 (NSW) (formerly the Property, Stock and Business Agents Act 2002 (NSW)). It does not apply to changes to the residential tenancies framework, which also commenced on 23 March 2020.
“The Statement sets out that compliance obligations will be principally aimed at assisting industry participants to understand and comply with their new regulatory obligations,” Tim said.
“During this time, NSW Fair Trading’s compliance response will be to not penalise agents who are identified as non-compliant with the new regulatory obligations. However, they will expect non-compliant agents to demonstrate that they have taken active steps towards compliance within a reasonable time and also be fully compliant by the time the Statement expires.”
The Statement of Regulatory Intent and, therefore, NSW Fair Trading’s educative approach to compliance is effective until 30 September 2020 (unless otherwise varied in the interim), at which time they will move to more active compliance enforcement.
Importantly, the Statement only applies to new regulatory obligations; that is, the changes comprising the industry reforms package. NSW Fair Trading has retained the option to take active enforcement action against existing regulatory obligations that did not change on 23 March 2020. This will especially be the case where non-compliance poses a higher risk of consumer detriment; for example, unlicensed trading, underquoting and failure to hold professional indemnity insurance.
The right approach
Tim said he was pleased with NSW Fair Trading’s decision to stay enforcement action regarding the industry reforms for six months.
“It’s the right thing to do,” he said. “Our industry has been faced with an enormous amount of change in one hit. From the industry reforms and new Supervision Guidelines to the comprehensive overhaul of the residential tenancies framework, every aspect of real estate has been touched. Even putting what’s happening due to COVID-19 aside, that’s a huge amount of change to absorb and apply.
“COVID-19 has been an enormous disruption and will continue to be for the foreseeable future.”
Moving forward
And what will happen when 30 September 2020 rolls around and the six-month stay on enforcement action expires?
“We don’t know how long it will take for the COVID-19 crisis to stabilise,” Tim said. “Taking account of the extreme disruption the industry has experienced during this time, it may be necessary to ask NSW Fair Trading for an extension of this stay on enforcement. If needed, this will give everyone sufficient time to dedicate the necessary resources to implement the reforms, without the all-consuming disruption of doing what needs to be done just to keep the doors open and remain viable in the wake of COVID-19.
“At this stage, it’s really a case of ‘watch this space’. REINSW will be supporting members and keeping you up to date every step of the way.”