Grounds for disciplinary action
The Secretary can take disciplinary action against licensees and certificate of registration holders, and former licensees and certificate holders, who:
- breach the Act or Regulation, including the Rules of Conduct – for example, failure to account for money held in trust, or failure to properly supervise employees
- breach a licence or certificate condition
- conduct business in an illegal, unfair or incompetent manner
- become disqualified from holding a licence or certificate
- cease to be suitable ‘fit and proper’ for the duties of licensee/certificate holder
- fail to pay a required contribution to the Compensation Fund
- fail to comply with an undertaking made to, or a directive made by the Secretary
- fail to pay a fine imposed by the Secretary following disciplinary action
- hold a licence or certificate that has been obtained fraudulently or by mistake.
Where there are grounds for disciplinary action, the Secretary can take the following actions:
- caution or reprimand – issue a written warning that an aspect of the person's conduct is in breach of the Act and could be grounds for further disciplinary action
- directive – an instruction to take a particular action within a specified time
- undertakings – a direction requiring the person to agree to operate in a certain manner
- monetary penalty – impose a fine of no more than $11,000 for an individual, and $22,000 for a corporation
- licence condition – impose a condition on the licence/certificate, for example, a condition that prevents the holder from performing certain functions
- licence suspension – stop a licence/certificate for a period no longer than the unexpired term of the licence/certificate
- cancellation – cancel a licence or certificate of registration
- 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
In addition to the disciplinary action option, the Secretary can:
- require an agent to discontinue unjust conduct, rectify any consequences of such conduct and apply to the NSW Civil and Administrative Tribunal (NCAT) for an order restraining the conduct if the licensee does not desist.
- issue public warnings – where urgent action is needed to protect consumers from significant loss or harm, the Secretary may issue, where public risk is immediate, a public warning alerting consumers to the risks of dealing with a particular person
- appoint 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 clients. Also, in a range of cases, including where a licence has been suspended or cancelled, or where a failure to account is suspected, the Secretary may apply to the Supreme Court to appoint a receiver.
Complaints and investigations
Any person can make a complaint to the Secretary about a breach of the legislation. NSW Fair Trading canconduct investigations and take disciplinary action whether or not a complaint has been made for example, where an investigator has identified a breach.
Penalty notices are a quick and efficient way of dealing with minor 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 and prevents further disciplinary action from being taken for the offence, but does not affect any civil claim arising from the matter.
The aim of the penalty notice scheme is to encourage changes in an agent’s conduct to achieve compliance 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 disciplinary action would be more appropriate might include repeat or deliberate offences or behaviour that has caused serious detriment to consumers.
When new penalty notice offences are introduced, it is NSW Fair Trading’s policy to proceed with gradual implementation in the first six months. During this time on-the-spot notices are not issued and all penalty notices must be approved at a supervisory level before being issued.
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 $22,000 will apply for unlicensed trading by a corporation and $11,000 for an individual. Similar penalties apply for collusive practices at auction sales. Disciplinary action by the Secretary may be reviewed by NCAT.
Show cause notice
The Secretary can serve a show cause notice on a person where there are grounds for taking disciplinary action against the person. A show cause notice gives the person the opportunity to make a submission to the Secretary demonstrating the reasons why they believe that the proposed disciplinary action should not be taken. The person can seek legal assistance in the preparation of a submission.
The issue of a show cause notice is usually the first step taken in a procedure which may result in a licence being suspended or cancelled or a person being disqualified from holding a licence. In situations of serious risk, the Secretary can immediately suspend a licence or certificate when issuing a show cause notice.
Show cause notices:
- are issued in writing
- give the person at least 14 days to respond
- indicate the range of penalties and action which might be taken under the Act, and
- describe the alleged conduct for which the action is proposed to be taken.
A person who receives a show cause notice can make a verbal or written submissions to the Secretary. Go to the notice to show cause page for more information.
Appeals against disciplinary decisions
A person can apply to NCAT to review the Secretary’s decision on the disciplinary action.