Disciplinary action and other regulatory action against property agents

Grounds for disciplinary action

Under the Property and Stock Agents Act 2002 (the Act) and the Property and Stock Agents Regulation 2022 (the Regulation), NSW Fair Trading can take disciplinary action against a person who is or was the holder of a licence or certificate of registration, who:

• breach the Act or Regulation, including the Rules of Conduct
• breach another law administered by the Minister, including the Australian Consumer Law, or breach the Competition and Consumer Act 2010 (Cth)
• breach a licence or certificate condition
• conduct business in an unlawful, improper, unfair or incompetent manner
• become disqualified or otherwise not eligible to hold a licence or certificate
• cease to be ‘fit and proper’ to hold a licence or certificate
• fail to pay a required contribution to the Property Services Compensation Fund
• fail to comply with an undertaking made to, or a directive made by, NSW Fair Trading
• fail to pay a monetary penalty imposed by NSW Fair Trading following disciplinary action
• hold a licence or certificate that has been obtained fraudulently or by mistake. 

Types of disciplinary actions

Where there are grounds for disciplinary action, NSW Fair Trading can take the following actions:

• caution or reprimand – issue a written warning  
• undertakings – issue a direction requiring the person to provide an undertaking agreeing to operate in a certain manner
• directive – issue an instruction to take a particular action within a specified time
• monetary penalty – impose a monetary penalty  of no more than $11,000 for an individual, and $22,000 for a corporation
• condition – impose a condition on the licence/certificate, for example, a condition that prevents the holder from performing certain functions
• suspension – suspend a licence/certificate for a period no longer than the unexpired term of the licence/certificate  
• cancellation – cancel a licence or certificate  
• disqualification – declare a person as disqualified from holding a licence/certificate under the Act, either permanently or for a set period of time
• disqualification from management – disqualify a person from being involved in directing, managing or conducting the business of a licensee, either permanently or for a set period of time
• requiring the person to publicise their misconduct in a way specified by NSW Fair Trading
• requiring the person to engage an independent valuer, for a period specified by NSW Fair Trading, to verify the estimated selling price or the revised estimated selling price in an agency agreement  
• requiring the licensee in charge to approve the estimated selling price or the revised estimated selling price in agency agreements, for a period specified by NSW Fair Trading
• suspending a person from exercising certain functions authorised by their licence or certificate of registration
• requiring the person to provide an indemnity for claims against the Property Services Compensation Fund arising from their conduct. 

Notice to show cause

NSW Fair Trading can serve a Notice to show cause on a person under the Act where it is of the opinion that there are grounds for taking disciplinary action against the person.  

A Notice to show cause gives the person the opportunity to make a submission to NSW Fair Trading demonstrating the reasons why they believe action should not be taken. The person can seek legal assistance in the preparation of a submission.

The issue of a Notice to show cause is usually the first step taken in the disciplinary process which may result in a licence being suspended or cancelled, or a person being disqualified from holding a licence. Any disciplinary action being taken is set out in a disciplinary decision document. In situations of serious risk, NSW Fair Trading can immediately suspend a licence or certificate when issuing a Notice to show cause.

Notices to show cause:

• are issued in writing
• give the person at least 14 days to respond
• indicate the range of penalties and other actions which can be taken under the Act, and
• describe the alleged conduct for which action may be taken.

A person who receives a Notice to show cause can make a verbal or written submission to NSW Fair Trading. Go to the notice to show cause page for more information.

NSW Fair Trading is required to consider previous offences and other contraventions of the Act and the Regulation when determining appropriate disciplinary action to impose. 

Appeals against disciplinary decisions

A person issued with a disciplinary decision may:

• request an internal review of that decision
• submit an application for review by the NSW Civil and Administrative Tribunal (NCAT) if they are not satisfied with the internal review decision. 

Penalty notices

Penalty notices are a quick and efficient way of dealing with less serious offences. NSW Fair Trading can serve a penalty notice on a person if there is evidence that they have committed an offence under the Act or Regulation.

If the person does not wish to have the matter determined by a court, they can pay the amount of the penalty within the time specified in the notice. Payment of the penalty is not regarded as an admission of liability.

The aim of the penalty notice scheme is to encourage agent conduct that complies with the laws. NSW Fair Trading has guidelines on the use of penalty notices to ensure that the integrity of the penalty notice scheme is maintained and that it is used consistently and only for appropriate offences, that is, offences of a minor or technical nature. Circumstances where stronger action would be more appropriate might include repeat or deliberate offences or behaviour that has caused serious detriment to consumers.

Maximum Court-imposed penalties

Penalties under the Act reflect the seriousness of offences. For example, a person who commits trust account fraud will be guilty of an indictable offence and liable to imprisonment for a term of up to 10 years. A maximum penalty of $110,000 will apply for unlicensed trading by a corporation and $55,000 for an individual. Similar penalties apply for collusive practices at auction sales.

Suspensions, injunctions, undertakings, public warnings and appointing a manager

NSW Fair Trading can also take other regulatory action, including:

• suspending  a person’s licence or certificate for a period of not more than 60 days under the Fair Trading Act 1987. This suspension is available in instances where the Secretary is of the opinion that there are reasonable grounds to believe that a licensee has engaged in conduct that constitutes grounds for suspension or cancellation, is likely to continue that conduct, and where urgent action is necessary to prevent significant harm, loss, or damage to others
• applying  to the Supreme Court for an injunction restraining a threatened or apprehended contravention, or the continuation of a contravention, of a provision of the Act or Regulation
• accepting a written undertaking given by a holder of a licence or certificate of registration
• issuing public warnings – where urgent action is needed to protect consumers from significant loss or harm, NSW Fair Trading may issue, where it is in the public interest to do so, a public warning alerting consumers to the risks of dealing with a particular person
• appointing managers and receivers – a manager can be appointed to carry on the business of an agent whose licence has been suspended or cancelled or who is no longer able to properly manage the business, to prevent disadvantage to existing customers. NSW Fair Trading may also apply to the Supreme Court to appoint a receiver in a range of cases, including where a licence has been suspended or cancelled, or where a failure to account is suspected.