The Minister for Consumer Affairs, Hon Tony Robinson MP, has asked that the Estate Agents Council (the Council) conduct a review regarding Modernising the Estate Agents Act 1980.

In particular the Council has been asked to review the Estate Agents Act and the regulations to identify provisions that are central to the regulation of estate agents and most in need of modernising because they are:

• Unclear either in relation to the drafting of the provisions including the terminology or language used, the complexity of the provision or the linkages between related but separate provisions
• Redundant in the context of contemporary industry practice or consumer needs
• No longer effective in meeting their intended objectives
• Inconsistent with, in part or full, or duplicate the provisions of other Victorian or Commonwealth legislation that apply to the conduct and practices of the estate agency industry and
• Unnecessarily burdensome for industry when weighed against the benefits for consumers

The Council’s Review

As part of its Modernisation Review the Council has produced a position paper. It is designed to advise the Minister of the Council’s preliminary views as well as a means of seeking further input from industry, consumers and stakeholders. The next stage of the review will involve consultation on the position paper and the formulation of a final report and recommendations to the Minister.

Review Focus

This Modernisation Review is still in its early stages but based on its initial consideration of the issues and consultation with stakeholders and interested practitioners the following areas of the Act have been identified as being in need of modernisation and/or unnecessarily burdensome for industry when weighed against the benefits for consumers:

Role of Agents’ Representatives

• Section 13 Agents representatives
• Section 13A Estate agents to be responsible for the acts of their representatives
• Section 47 Authorization of agents’ representatives

It is the initial view of the Council that the role of agents’ representative in the market place is problematic. The Council is particularly concerned about ensuring that estate agents are responsible for the conduct of their agents’ representatives. It has also considered whether further additional accountability mechanisms could be put in place to support this objective and whether in fact there is a need for the legislated role of agents’ representative.

Supervision and Accountability

• Section 29B Duties of agents officers in effective control
• Section 30 Management of an estate agency office
• Section 30A Absence of estate agent or branch manager

The Council’s is interested in ensuring that the Act enshrines sufficient accountability structures regarding the respective roles of the officer in effective control and branch manager. The Council is in favour of reinforcing the importance of the licensed agent or the officer in effective control being ultimately responsible for the estate agency business while contending that regulation is not needed to deal with administrative matters such as the role of the branch manager in the office and short-term absences.

Reducing the Regulatory Burden –Office Processes

• Section 35 Registered office and address
• Section 36 Name of the estate agency business
• Section 39 As to displaying notice on places of business
• Section 40 Letterhead
• Section 46 Employee statements

The Council is concerned that there are a number of sections in the Act which deal with standard business processes that should not be the concern of industry specific legislation. These would include the registration of the business name, display of office signage, letterhead requirements and the maintenance of employee statements. The Council does see merit in the requirement that a registered office location be lodged but this practice also needs to be reviewed to ensure it is in keeping with contemporary practices. The Council is inclined to the view that the focus of legislation/ regulations should be on the big picture items, such as licensing, conduct and trust accounting, not office minutiae which burdens business while not enhancing consumer protection.

Fair Trading Act – Misleading or Deceptive Conduct, False Representations

• Section 38 Unlicensed person pretending to be licensed as an agent
• Section 42 Advertising
• Section 47A Seller must be given estimated selling price
• Section 47B False representation to seller or prospective seller
• Section 47C False representation to prospective buyer

The Council considers these sections which broadly deal with outlawing disingenuous pricing and advertising practices commonly associated with underquoting to be of critical importance. The Council is interested in the notion that the Fair Trading Act could be used as a mechanism to address such practices, rather than the current arrangement whereby the estate agency industry is bound by multiple pieces of legislation including their industry specific Act and regulations as well as the FTA and Trade Practices Act 1974. The greater reliance on sections of the FTA and the Trade Practices Act dealing with misleading or deceptive conduct or false representations supplemented if necessary with industry specific regulations could impose a more stringent regime around pricing and advertising. Such an approach would be consistent with activity at the national level to move towards a national generic consumer law based around fair trading principles.

Continuing Professional Development

• Section 45 Continuing Professional Development

The Council regards section 45 of the Act related to continuing professional development to be a currently redundant provision given that it is not utilised. However we are of the view that this should not in fact be the case. The purpose and potential use of this section should be modernised to ensure that the potential benefits to the industry are realised and subsequently flow on to consumers.

Summary of Preliminary Findings:

In summary the preliminary position of the Council is that the Estate Agents Act 1980 could be modernised by:

• Reviewing the role of agents’ representatives and liability for their conduct;
• Revising the accountability structure of licensed agent/ officer in effective control-branch manager-licensed estate agent-agent’s representative;
• Removing agent reporting obligations in relation to absences;
• Reducing the level of prescription in the Act in respect of some estate agency office processes and procedures;
• Recasting the Act’s underquoting provisions to focus on the more generic obligations found in the Fair Trading Act adapted to the industry;
• Removing provision that duplicate obligations under the Fair Trading Act or Business Names Act;
• Reinvigorating section 45 regarding compulsory professional development to ensure that this provision is greater utilised;
• Evaluation of the overall drafting, structure and level of regulation currently contained in the Act.

Consultation – The Council Welcomes Your Feedback!

You can now download the Estate Agents Council's Position Paper -Modernising the Estate Agents Act 1980 (July 2009) in its entirety.

Submissions should be sent either electronically to eac@justice.vic.gov.au or via mail to:

Philip Gardner
Chair, Estate Agents Council
C/O Giorgia Moar
Consumer Affairs Victoria
Level 20, 121 Exhibition Street
MELBOURNE VIC 3000

All feedback must be received by close of business Friday 14 August 2009.

If you have any questions about the Council’s Modernisation Review, please feel free to contact the EAC on (03) 8684 6402.

The Estate Agents Council welcomes your contribution to this review and the opportunity to join the Council in providing the Minister with expert advice in this important area of legislative development.