The REINSW says a Parliamentary Inquiry is required after Fair Trading's "gross negligence and now regulatory backflip" involving trust account audits, following the state's largest fraud case.

Last month, Fair Trading charged Nicolette van Wijngaarden, the director of Unique Estates with the largest trust account fraud ever recorded. Wijngaarden was charged with 15 counts of fraud totalling $3.5 million.

In an extraordinary turn of events, Mr Kean has written an explosive letter to REINSW President Leanne Pilkington, questioning whether the industry body remains a fit and proper body to train agents.

REINSW CEO Tim McKibbin told WILLIAMS MEDIA he finds it "entertaining" that Mr Kean was quick to respond to the REINSW's calls for a Parliamentary Inquiry, yet refuses to respond to a letter asking for a dedicated property minister.

Related reading: REINSW CEO blasts Fair Trading, calls for dedicated property minister

"It appears to me that the Minister is sewing on the attack because it's part of a defence strategy. Before taking the decision to request a Parliamentary Inquiry, I wrote to the Minister back in May and said that I have a series of questions which I asked him to respond to so that we could notify our members of his response and the policy decisions of his party. He refuses to respond to that letter," Mr McKibbin said.

"I find it entertaining that the Minister is quick to come out and respond to our call for a Parliamentary Inquiry, yet refuses to respond to our letter. That is very difficult to reconcile in my mind," Mr McKibbin told WILLIAMS MEDIA.

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Mr McKibbin says there has been a litany of poor decisions associated with agency practice by Fair Trading, particularly over the last four years.

“Fair Trading has removed what they believe is “red tape”. Unfortunately, their “red tape” are consumer protection procedures and processes. The cost of these decisions can be counted in the millions of dollars, and continue today to expose consumers to unnecessary risk.

“I implore the NSW Government to urgently commission a Parliamentary Inquiry into Fair Trading’s policy and decision-making processes. Fair Trading continue to make decisions regarding the property market, property services industry and consumer with no subject matter knowledge, competencies or experience.

In his letter, Mr Kean says people could infer from Mr McKibbin’s statements that the institute does not understand the legal obligations of its members or was trying to deliberately mislead the public.

“A finding of either of these things would raise serious questions over whether the REINSW is a fit and proper person to provide continuing professional development,” Mr Kean said in his letter.

“Accordingly, I ask that you please provide me with an explanation of these inaccuracies within 14 days. Setting aside the obvious error that Fair Trading did not amend the law, the NSW Parliament did, the claim that the amendment referred to ‘removed all the protection of an independent audit’ is incorrect – audits are still required and auditors are required to lodge reports where they identify a financial irregularity.”

Mr McKibbin told WILLIAMS MEDIA he can't understand how Mr Kean can make that allegation.

"Firstly it's unsubstantiated, secondly we're calling for a Parliamentary Inquiry, now it doesn't get much more transparent than a Parliamentary Inquiry. I invite the Minister and Premier to convene a Parliamentary Inquiry and I ask them to shed as much light as possible on the industry and the ability Fair Trading have to regulate the industry.

"We invite all the scrutiny, we invite any and all enquiries into the industry and into the institute's calls for reform, and for the ability to work constructively and cooperatively with the industry, which they won't," Mr McKibbin said.

"I can't see this being resolved any time soon which is disappointing and I have to say, it is not good government. The electorate will no doubt make its decisions in relation to the Minister's ability to lead this department and influence policy."

"More cases of trust account fraud to follow"

Mr McKibbin says there will be more cases of trust account fraud to come until Fair Trading’s mistake is washed through the system.

"All of this could have been avoided if Fair Trading had accepted the advice from REINSW. Four years ago, Fair Trading made the decision to remove the obligation for real estate agents to lodge their annual trust account audits in what it claimed removed “red tape".

“Upon becoming aware of the decision we opposed it, pointing out that this procedure is a consumer protection mechanism which is applied in all industries where providers of goods and services hold client's money in trust.

“The only “red tape” and administrative burdens removed was from Fair Trading. In this instance, the agent was still required to do the audit, which is the major imposition. Removing the obligation to lodge the audit with Fair Trading meant Fair Trading no longer had the administrative burden of reading the audit reports.

“With one strike of a pen – and despite strident opposition from the Institute – Fair Trading removed all the protection of an independent audit. It created the ludicrous situation where only agents who had behaved fraudulently needed to notify Fair Trading that their audit had identified their fraud, and as a result, incidents like the van Wijngaarden case and others cost consumers millions of dollars.”

Mr McKibbin says the trust account policy reversal was just one example of dangerous decisions made at Fair Trading.

“Fair Trading has a “give it a go and see what happens”decision-making process. Thankfully this consumer injury can be corrected with money - other decisions have far more dire and irreversible consequences.”

Mr McKibbin said following a successful prosecution as in the case of Nicolette van Wijngaarden, Fair Trading and the Minister are quick to claim the credit for their consumer protection actions.

“This is a grossly misleading representation, the truth when the person who has committed the offence comes to the realisation themselves that there is no way out of the circumstances they walk through Fair Trading’s doors and advise of their wrongdoing.

“Fair Trading has done absolutely nothing by way of proactive consumer protection,” Mr McKibbin said

“REINSW seeks to work cooperatively and constructively with a competent Regulator and Minister. Sadly neither currently exist.

Mr McKibbin said saving the consumer from Fair Trading’s constant flow of ill-conceived decisions is a full time and exhausting job.

“Recently, and alarmingly, Fair Trading announced as part of the Consultation Paper, Easy and Transparent Trading – Empowering Consumers and Small Business - that they would be de-licensing auctioneers – they appear to view an auction as simply a theatrical performance.

“This case provides yet more evidence why a Parliamentary Inquiry needs to be held urgently into the decision-making processes of Fair Trading.

“The property services industry wants to improve the consumer’s experience with the industry and drive consumer protection initiatives.

“It’s ironic that we have to fight Fair Trading and even our own Minister every step of the way to make this happen,” Mr McKibbin said.

Industry reforms needed

Mr McKibbin has been part of the push for better industry regulations, including increased education standards and a dedicated property minister.

"We have pushed for a reform into the property services industry. It was the institute that throws the reform and that legislation went through Parliament earlier this year. That was the consequence of many years of the institute lobbying for improvements in our sector. Entertainingly, when it did go through, the Government stood up and took credit for it, and now they have sat on their hands ever since and done nothing," Mr McKibbin told WILLIAMS MEDIA.

Related reading: One in five NSW agents not meeting professional development standards

"The Office of Fair Trading sets the education standards for the property services industry. They believe that someone is competent to provide consumers with advice and deliver services with less than a week's training. Now, if that is not an indication of how little Fair Trading knows about our industry, I don't think anything will change. 

"The REINSW drove the regulatory reforms and called for increased education standards, and positive regulatory reforms to protect the interests of consumers. The institute is guided by the belief that what is good for the consumer is good for the market and the property industry. Every decision we take is based upon that belief," Mr McKibbin said.

REINSW announces new President-Elect

Brett Hunter will be President-Elect of the industry body, effective November 2018- for a one-year term. 

REINSW CEO Tim McKibbin said the appointment of Brett Hunter as President-Elect will ensure a smooth transition when REINSW President Leanne Pilkington steps down in 12 months time.

“Brett has contributed to the direction and strategy of the REINSW for 10 years, and is recognised within the industry as a strong leader and innovator,” Mr McKibbin said.

The new REINSW Board was sworn in today at the REINSW AGM. 

Related reading:

REINSW CEO blasts Fair Trading, calls for dedicated property minister

REINSW resigns from Real Estate Reference Group

REINSW pushing for real estate to be formally recognised