Financial impact analysis of Statutory Trusts in the building and construction industry

Submission cover sheet

  • Name of organisation or individual making this submission

    Anonymous

Questions on possible options

  1. Please provide your comments on the Report

    1. The SOPA was also intended to reduce bankruptcies. I suspect that it has had opposite effect, because the parties at the top of the contracting chain can become liable for large amounts within a short time in a system that is weighted in favour of the lower level contractors. 2. The problems manifest at the second level, with trade contractors who sub-subcontract their works but who lack the accountancy expertise to manage trust accounts (many solicitors strive to avoid trust accounts because of the fiduciary duties and the administrative complexities. I struggles to imagine any of my trade subcontractor clients managing trust accounts - KISS 3. The logical location of trust accounts is with 1st to 3rd tier builders / contractors, many of whom manage currently their retention obligations quite well. 4. Putting the comments together - it seems to me that the benefits will be minor because the 1st to 3rd tier contractors are already managing the retention issues quite well. The costs are likely to be substantial because I expect the lower level trade contractors to manage their trust accounts poorly. There will presumably be some form of audit, raising the issue of how will that function be funded. Finally, I expect that the trade contractors are likely to mal-administer the accounts. Summary -Substantial additional costs, distraction and disruption for a benefit that is likely to be illusory.

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Website https://www.fairtrading.nsw.gov.au

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