24 December 2019
Changes have been made to the Settlement Agents Act 1981 (the Act), which will come into effect on 1 January 2020. This bulletin provides a brief overview of the more significant changes and how they will affect licensees. Changes to the Settlement Agent Regulations 1982 (the Regulations) are currently being drafted and further information about any changes will be provided as it becomes available.
Option to surrender triennial certificate at any time
Currently, licensees who wish to retain their licence can only surrender their triennial certificate when it expires. The amendments introduce the ability for licensees to surrender their triennial certificate at any time and simply pay the holding fee to hold on to their licence.
Licensees can then apply to renew their triennial certificate when they wish to return to the industry.
This amendment eliminates the need for licensees to maintain their triennial certificate for months or years until expiry if they are not using it for long periods - such as when they are employed directly by another licensed agent or during extended leave from the industry. Because triennial certificate holders are required to, at all times, remain insured under the fidelity insurance and professional indemnity insurance Master Policy Agreement, this amendment is expected to significantly reduce costs for many agents.
New Ability to add and remove conditions on licences and triennial certificates at any time
The amendments allow the Commissioner to impose or remove conditions on licences and triennial certificates at any time, rather than only at the time of granting or renewing.
For example, the Commissioner will now be able to impose (and remove) conditions regarding the requirement to hold a policy of indemnity or fidelity insurance. If an agent commences employment with a licensed settlement agent during the term of their triennial certificate, but wishes to retain their certificate, the Commissioner can impose a condition waiving the requirement for the agent to hold insurance under the Master Policy while they are directly employed by (and covered under the insurance of) their employer, saving agents the cost of insurance premiums in these circumstances.
If the Commissioner is considering imposing a restrictive condition, the licensee must be notified in writing, and be offered the opportunity to make submissions in relation to the proposed condition. If a condition is ultimately imposed that the licensee is aggrieved by, the decision is reviewable by the State Administrative Tribunal (SAT).
Changes to when a licensed agent is required to surrender a licence and triennial certificate
New section 26(3) of the Act provides that where a licensee is required to surrender a licence and triennial certificate under new sections 34D(2) or 34D(3) and continues to carry on business or hold himself out to be a licenced agent, the person will be taken to be unlicensed for the purposes of the Act.
Penalty for breach of the requirement for a settlement agent to be licensed has been increased from $20,000 to $100,000.
Requirement to surrender a firm or body corporate licence and triennial certificate if licensee becomes unqualified
Section 30(4) of the current Act requires that a licensee surrender their licence and triennial certificate if they cease to have the qualifications for holding the licence.
From 1 January 2020 the licence and triennial certificate must be surrendered within 5 days after the licensee ceased to have the required number of licensed directors or have a licensed person in bona fide control of the business.
The amendments clarify that a firm or body corporate becomes unqualified if they cease to have the requisite number of licensed partners/directors and/or a licensed person in bona fide control. If the firm or body corporate ceases to be qualified by reason of death or withdrawal, they can operate in accordance with clause 10 of Schedule 1 of the Act for up to 3 months, after which they must surrender their licence and triennial certificate if they remain unqualified.
The amendments clarify that if a licensee becomes unqualified and is required to surrender their licence and triennial certificate, they will be considered to have surrendered them five days after becoming unqualified and will become unlicensed, even if they have not they complied with the requirement to surrender.
Licensee’s triennial certificate: late renewal
Section 32 of the Act is amended to refer to the renewal of a licensee’s triennial certificate, reflecting the requirement that a renewal can take place under this section only if the applicant holds a current licence because a holding fee has been paid to retain the licence under section 30(2a).
It also clarifies that where a triennial certificate is renewed more than one month but less than 12 months after expiry or surrender, the renewal will take effect on the date the application is granted, unless the Commissioner is satisfied that special circumstances exist that mean that it should take effect from the day after expiry or surrender to maintain continuity.
These amendments do not affect the power of the Commissioner to refuse to renew the triennial certificate.
New penalties for breaches of provisions for Trust Accounts
The penalties for breaches of Division 2 – Trust accounts have been deleted and new provisions inserted which provide:
- in the case of a penalty against section 49(4) or (5), a fine of $25,000 or 2 years imprisonment;
- in the case of an offence against section 49B(1), a fine of $50,000;
- in any other case, a fine of $25,000.
CPD requirements
Recent changes to the Act mean that you will need to meet your annual compulsory professional development (CPD) requirements every calendar year or face potential enforcement action.
Settlement agents are required to complete CPD activities by the Regulations. The Act has been amended to create an offence for non-completion of CPD. Modified penalties to enable infringement notices to be issued as an alternative to prosecution or other disciplinary action are currently being drafted. Further information will be provided once the arrangements are finalised.
From 1 January 2020 the Commissioner will be able to review your compliance with CPD obligations and apply a condition to a certificate for non-compliance at any time not just at renewal of your certificate.
From 1 January 2021 should you not comply with the annual requirement to undertake 6 hours of CPD training in any single year the Commissioner will have the ability to either:
- issue an infringement notice;
- take disciplinary or prosecution action; or
- apply a condition to a certificate
This offence will come into effect on 1 January 2020 and will be enforced from 1 January 2021. New modified penalties are currently being drafted to enable infringement notices to be issued in place of prosecution or disciplinary action.
Disciplinary Action by SAT
Section 83 of the Act has been amended to provide that despite the surrender of a licence or triennial certificate by a person or a licensee ceasing to be licensed or to hold a triennial certificate, an allegation in respect of a person may be made to the SAT not later than 12 months after the day on which the licence or certificate was surrendered or the licensee ceased to be licensed or hold a certificate.
In this case the SAT may exercise the powers of section 84(1) to do one or more of the following:
- reprimand or caution;
- impose a fine not exceeding $10,000; and/or
- permanently or temporarily disqualify him from holding a licence or triennial certificate, or both.
Fidelity Guarantee Account
Section 93 of the Act is amended to reimburse a person for the person’s pecuniary or property loss to the extent of the defalcation, with the approval of the Chief Executive Officer, if the defalcation occurred during the period of 6 months immediately following the day on which the person ceased to be licensed or the holder of a triennial certificate.
False or misleading information
The amendments extend the offence (and $20,000 penalty) for providing false or misleading information from information only relating to applications to any information provided to the Commissioner or the Chief Executive Officer at any time. Agents are reminded of their obligation to provide complete and truthful information in respect of their dealings with the Commissioner, Chief Executive Officer and officers of the Department administering the Act on their behalf.
Licence and triennial certificate not to be transferrable
A licensee shall not in any way permit or hold himself out as being willing to permit another person to use the licence or triennial certificate of the licensee. The penalty for a breach of this provision has been increased from $20,000 to $100,000.
Resources
If you would like to view all of the amendments in detail, a tracked version of the Act, incorporating the changes can be found under the Consumer Protection Legislation Amendment Bill 2018 page on the Parliament of Western Australia website.
The updated SA Act, incorporating the proclaimed amendments, should be available on the WA Legislation website in January 2020 – agents should review the amended Act and familiarise themselves with the changes.
Watch this space for future updates when the regulations change.
In the meantime, if you have any questions contact us on 1300 304 054 or by email