Think it could never happen to you? Poor administration, lack of diligence and a few loose ends mean that losing your licence is only too possible, as Natalie Hastings explains.
Have you ever seen How to Lose a Guy in 10 Days? It’s a laugh-out-loud rom-com starring Matthew McConaughey and Kate Hudson which depicts an array of classic relationship faux pas – guaranteeing the characters a one-way trip to singletown.
In my role as a real estate trust accountant and trainer, I’ve seen real-life property industry versions of this film – but they’re far from funny, and often result in heavy fines and even jail time. It’s called ‘How to Lose Your Licence in 5 Easy Ways’.
Here’s how to do it – although we recommend you taking best practice in your estate agency with the seriousness it deserves, drawing upon appropriate training, education, technology and support as required.
- Playing with other people’s money. It’s called a trust account for a reason, not a ‘please use clients’ funds for your own business or personal expenses’ account. Inappropriate use of funds represents a breach in trust account, and more agents are ‘done’ for this each year than you might expect. Equally serious is not correctly recording trust account transactions; this is misuse, but not fraud.
- Laissez-faire with licensing. Pressed for time and on a tight budget? Some agents fall into the trap of hiring staff who are not licensed – either by neglecting to double-check, or by ignoring their lack of a formal licence for reasons of their own. When a trust accounting or fraud issue then appears, it’s ‘too little too late’ in the eyes of their defrauded clients, and the law. Another related way to lose your licence is to neglect industry training and other basic requirements of licence-holding. It’s more than just achieving CPD points!
- Whatever, paperwork. Laterz, compliance. Principals on a one-way street to licence-losing are those who put paperwork and auditing on the ‘to-do’ list. They don’t keep critical paperwork safe (such as signed management or sales agreements), will have virtually no systems and processes around document management, and it’s likely the OIEC won’t have been signing off on end-of-month paperwork. Another sign of a business on its way to licensing oblivion is a lack of correct licensing signage on their front door.
- Nudge nudge, wink wink. Fancy a little somethin’ somethin’ on the side in terms of kickbacks and cash money from referrers? You’re well on your way to losing your licence. Accepting bonuses and payments from affiliated valuers, inspectors and partners is always inappropriate as an estate agent. In fact, it’s illegal for an agent to receive favours, gifts or money from associated services or referral partners.
- We don’t need no education. You do, actually. The best agencies put time and money into upskilling their teams regularly. They actively seek out peer mentoring, tech training and look to their local real estate institutes for valuable CPD-point garnering education. They are usually rich with safety valves in their businesses (better known as protective systems and processes). As consumers grow increasingly educated about property investment, the real estate industry has further professionalised. An agency that thinks it ‘knows it all’ and falls behind – siloing itself in dinosaur philosophies about service – is at risk of failing to be compliant and losing its licence.
So there you have it: how to lose your licence in five easy ways. No one wants to commit fraud, endanger themselves or their clients, or fail at being an agent – but if you let your standards fall, it’s a slippery slide towards losing your licence and your business.