Refer to our Code of Conduct page to view the Settlement Agents Code of Conduct.
A lot of the rules look different - what has changed?
The rules have been redrafted in line with modern legislative requirements and to ensure consistency with the other property industry codes and the Settlement Agents Act 1981. It is important to note that the duties and responsibilities of licensees remain the same. Licensees must:
- act in good faith and exercise due skill, care and diligence;
- act in the best interests of their clients; and
- be honest in their dealings with all persons involved in a transaction.
When do I have to use the Form 2?
The new Code requires that the Form 2 disclosure notice be used in any of the following situations:
- where there is a relationship between the settlement agent and a related person as listed in rule 22(2);
- where the settlement agent proposes to act for more than one party to the transaction;
- where another licensed agent at the settlement agent’s firm acts, or proposes to act, for another party to the transaction;
- where a conflict of interest or potential conflict of interest exists between the client’s interests and the interests of the settlement agent ; or
- when the settlement agent has an interest in the transaction.
How will I know if I have to disclose a conflict of interest?
A potential conflict of interest exists if there is a real sensible possibility of a conflict.
A conflict or potential conflict may exist because of a conflict between the licensee’s own interest and that of the client, or because the licensee has an obligation to another person, which may cause conflict with the duty of loyalty they owe to their client.
Will a conflict of interest always be financial?
A conflict of interest or duty can arise whether the personal interest of the settlement agent is financial or non-financial, direct or indirect. A non-financial interest includes interest by way of association, for example, a family or business connection.
Is there a list of conflicts of interest?
No, it is not possible to provide a definitive list of all possible relationships and situations in which a conflict of interest may arise. Licensees should consider how their interests or relationships may be perceived by their clients (particularly if they are not disclosed at the outset). The Code is flexible and allows licensees to make their own decisions, however it would be prudent to document the decision-making if making an assessment in regards to a conflict of interest.
What is a fiduciary relationship?
A fiduciary relationship exists where someone holds a legal relationship of trust and confidence with one or more parties. Licensees already owe a fiduciary duty to their client, as this arises under the relationship of trust and confidence between the agent and their client when acting on their client’s behalf (eg. arranging settlement of their client’s property); however, this is now expressly stated in the new Code.
As a licensee is required to represent the interests of their client, they owe their client a duty to act with utmost loyalty and good faith and to avoid any conflict of interest.
Will I have to change my business practices because of the fiduciary duty rule?
No, you should not, as the fiduciary duty already applies. Licensees should already incorporate their fiduciary duty into their current business practices.
Is substantial attendance at the office still required?
The new Code requires that sufficient supervision is provided to ensure that the business is professionally conducted. This change should provide greater flexibility to businesses and recognises that with technological advancements, physical presence in the office is not always necessary.
Do licensed settlement agents working for another licensed settlement agent have to comply with the Code?
Yes they do. The rules of the Code apply to all licensees, whether they are working as an employee (who holds a settlement agent licence and is acting as a settlement agent) or whether they are a licensed settlement agent operating a business.