Take charge of compliance

16 February 2021

The 1 April 2021 implementation deadline for the Supervision Guidelines is looming. Here’s what you need to know to ensure compliance.

What are the Supervision Guidelines?

Licensees who operate a real estate business have a duty to properly supervise that business.

It seems straightforward enough, but what is proper supervision and who does the supervising?

Section 32(3) of the Property and Stock Agents Act 2002 (NSW) sets out that, at a minimum, proper supervision includes the requirements to:

• Properly supervise persons engaged in the business.
• Establish procedures to ensure that the Property and Stock Agents Act 2002 (NSW) and any other laws relevant to the conduct of the business are complied with.
• Monitor the conduct of the business in a way that ensures, as far as practicable, that those procedures are complied with.

Again, this seems straightforward. However, as anyone operating a real estate agency knows all too well, running a business involves a multitude of moving parts – and that’s to say nothing of the complexity of the legal framework that every business must adhere to in order to ensure compliance. It’s no wonder that it's difficult to know where to start.

Enter the Supervision Guidelines.

Section 32(4) of the Property and Stock Agents Act 2002 (NSW) allows the Commissioner for NSW Fair Trading to issue guidelines as to what constitutes the proper supervision of the business.

Formally known as the Secretary’s Guidelines for the Proper Supervision of the Business of the Licensee under section 32 of the Property and Stock Agents Act 2002, the Supervision Guidelines set out the minimum requirements to demonstrate compliance.

Is compliance with the Supervision Guidelines mandatory?

Yes, compliance with the Supervision Guidelines is mandatory and all real estate businesses must ensure that they can demonstrate the policies and procedures they have put in place in order to satisfy the obligations set out in the Supervision Guidelines. Non-compliance with the requirements of any part of the Supervision Guidelines constitutes a failure to properly supervise people engaged in the business.

It’s important to be mindful of the consequences that may flow from failure to comply with the Supervision Guidelines. The maximum penalties are hefty, with corporations facing a penalty of up to $22,000 and individuals up to $11,000.

What needs to be done to implement the Supervision Guidelines?

The Supervision Guidelines have been in place for a long time, so all licensees in charge should already have policies and procedures in place for the proper supervision of the business.

However, as part of the industry reforms package that commenced on 23 March 2020, the Supervision Guidelines were updated and reissued, and the new version is much more detailed. Compliance with the previous version of the Supervision Guidelines does not necessarily ensure compliance with the new version.

This means that all licensees in charge need to go through the new version of the Supervision Guidelines, point by point, and ensure that they can demonstrate compliance. Policies and procedures already in place may be sufficient, however it’s likely that there will be gaps to fill and additional policies and procedures will need to be implemented to comply with the new version of the Supervision Guidelines.

NSW Fair Trading has given licensees until 1 April 2021 to comply with the Supervision Guidelines. Ahead of this deadline, if NSW Fair Trading comes knocking at your agency door, as a licensee in charge you need to be able to demonstrate that you’re taking steps to implement the Supervision Guidelines. You can’t afford to leave it to the last minute.

“To ensure that licensees always have access to the latest version, the Manual is online. Each time a new version of the Manual is released, licensees will be notified and given details of what’s changed, which means areas for prompt review are easily identifiable.”

What is included in the REINSW Supervision Guidelines Manual?

Complying with the Supervision Guidelines is, without doubt, a big job – and the deadline for compliance is fast approaching.

To assist with compliance, REINSW has created a comprehensive and generic Supervision Guidelines Manual. The Manual includes commentary, step-by-step procedures, checklists, and other documents and resources to help licensees not only comply with the Supervision Guidelines, but also embrace the highest standards of agency practice.

The Manual has been compiled to follow the same format as the Supervision Guidelines themselves. For each section of the Supervision Guidelines, the Manual sets out the following:

• The law, including notes briefly setting out the legislative provisions relevant to the particular topic.
• Agency policy, setting out a sample policy for the particular topic.
• Compliance documentation, including checklists and other template documents relevant to the steps that need to be taken to assist with compliance.
• Resources, including (where relevant) a list of resources (including links, fact sheets, PDFs and more) that are relevant to the particular topic.

In short, the Manual provides the ‘how to’ for licensees in charge to comply with the Supervision Guidelines’ ‘must do’.

How should the REINSW Supervision Guidelines Manual be implemented?

Simply subscribing to the REINSW Supervision Guidelines Manual is not sufficient to ensure compliance with the Supervision Guidelines. Licensees in charge need to thoroughly review the content of the Manual and then take steps to implement all the policies and procedures set out therein.

REINSW has written the Manual to respond to the compliance needs of the majority of agencies. However, while there are certainly many similarities in terms of policies and procedures from agency to agency, there will also be some differences.

Therefore, licensees in charge must carefully and continually review the content of the Manual to ensure that it accurately reflects the way the agency conducts business. In certain circumstances, it may be necessary to add the agency policy and compliance documentation set out in the Manual to suite the particular attributes of the business. However, in doing so, care should be taken to ensure any changes and additions do not remove or amend the Manual’s compliant content.

Why is the REINSW Supervision Guidelines Manual online?

REINSW is committed to ensuring that the Supervision Guidelines Manual is always accurate and up to date, giving members the information and tools they need to implement in order to be compliant. This means that REINSW is on a journey of continuous improvement and will be regularly reviewing the Manual’s content and updating and enhancing it, as necessary.

Therefore, to ensure that licensees in charge always have access to the latest version, the Manual is in an online format. Each time a new version of the Manual is released, subscribers will be notified and given details of what’s changed, which means areas for prompt review are easily identifiable.

While a PDF of the Manual can be downloaded and printed, REINSW does not recommend it. Why? Because any printed version will not include the regular updates released by REINSW and will quickly become out of date.

Therefore, reference should always be had to the online version of the Manual as the ‘central source of truth’.

If you are a member and have questions about the Supervision Guidelines, you can call the REINSW Helpline on (02) 9264 2343 or email [email protected]