CONSUMER ACTS AMENDMENT BILL 2011 – Tuesday, 28 June 2011

Posted on 14. Jul, 2011 in Speeches

Mr LIM (Clayton) — I rise to speak on the Consumer Acts Amendment Bill 2011. I say at the outset that Labor has a very proud record in relation to consumer protection. I could go through the long list of our achievements, because we walk tall and proud among other states in Australia.
This omnibus bill makes amendments to a number of acts, including the Owners Corporations Act 2006, the Fair Trading Act 1999, the Conveyancers Act 2006 and the Consumer Affairs Legislation Amendment (Reform) Act 2010, and it repeals the Companies (Administration) Act 1981. However, the most significant amendment relates to the conduct of real estate agents, particularly in cases where they are to obtain a beneficial interest in property for which they are handling the sale.
Clause 4 of the bill amends the Estate Agents Act 1980 by substituting section 55 of the act and inserting a new section 55A. Specifically, clause 4 of the bill substitutes the following into section 55:
“55 Restriction on agent purchasing property
(1) An estate agent must not obtain a beneficial interest in any real estate or business that the estate agent has been commissioned by any principal to sell.
Penalty: 240 penalty units or imprisonment for 2 years, or both.
(2) An agent’s representative employed by an estate agent must not obtain a beneficial interest in any real estate or business that the estate agent has been commissioned by any principal to sell.
Penalty: 240 penalty units or imprisonment for 2 years, or both.
The legislation states very clearly that an agent or their representative must not buy a property for which they are handling the sale. Serious penalties are attached for breaching this provision. It is a very strong statement indeed. However, somewhat surprisingly, given what would appear to be such a strong principle, the bill goes on to insert into section 55(4) of the principal act that a breach does not occur if certain conditions are met, such as written acknowledgement and non payment of commission. The very strong legislative prohibition ends in a whimper by providing some fairly broad exemptions.
I am very concerned for members of my community from non English speaking backgrounds, because such legislation gives them no protection. There is such an obvious conflict of interest in the situation of an estate agent purchasing a property for which he or she is handling the sale that I wonder whether the conflict of interest can ever be satisfactorily overcome, no matter how honest the intentions of the agent are and no matter how well informed the vendor is in giving their consent. It is very difficult for those who are not familiar with the system to negotiate it when it is fair, let alone if they are dealing with people who are manipulating the system.
In other areas the balance of power between the professional and the individual obtaining the service is so heavily in favour of the professional that consent to certain things cannot be given, but in the case of the estate agent the focus is the property. For most people, a home is the most significant asset or investment they will ever own. There can be a marked imbalance in the relationship between the agent and the vendor — for example, an elderly, infirm vendor who has lost his or her spouse and is preparing to go into some form of supported accommodation. That is a situation I have come across quite a few times. In such a situation the imbalance of power in the relationship is so strong that I do not believe that conflict of interest issues can ever be overcome, and we need to seriously consider that type of circumstance.
I do not believe the government has made the case for overriding conflict of interest, let alone eliminating that conflict. I am not confident that there will not be complaints and legal disputes arising out of new section 55 of the Estate Agents Act 1980. I hope the minister will have a good look at this area and, if there is a need for amendment, that he will allow for that. The opposition is not opposing the bill, but this is a serious concern that needs to be taken into account.

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