1 Presentation to the Parliamentary Portfolio Committee 12 September 2007 Presentation by: Mrs N T Mapetla Chief Executive Officer.

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  • Presentation to the Parliamentary Portfolio Committee12 September 2007Presentation by: Mrs N T MapetlaChief Executive Officer

  • BACKGROUNDThe EAAB is a REGULATOR of the real estate industry in terms of Act 112 of 1976 as amended.

    Governments (the world over) intervene with economic regulation when self-regulation has failed.

    As a Statutory Body, the Regulator can only be dissolved by the an Act of Parliament. August this year, was the Thirty First Anniversary of the Boards existence. The question to ask is, what has been achieved in the past 30 years?

  • BACKGROUND ContWhen I took over as CEO, the Board did not have in place a number of basic organizational requirements such as an Organogram, Job Descriptions, HR policies, Financial policies, systems of internal financial control, strategic planning processes and statutory reporting mechanisms to the DTI and National Treasury as required by law (PFMA). Staff performance and professional discipline were problematic. Skills/Qualifications audit also revealed several cases of misrepresentation of qualifications. The affected people have since left the employ of the Board.

  • BACKGROUND Cont..The Board had not been audited for three (3) years preceding my arrival. Hence the qualified audit with a Disclaimer for that period. All that has since been rectified. We have had unqualified audit reports for two successive years despite the challenges that we faced regarding staff capacity. These challenges are being addressed through both training and recruitment of qualified staff.

  • THE ORGANISATIONAL STRUCTURE OF THE BOARDThe organisational structure of the Board, indicating the diverse functions and activities that it performs on a continuous basis, is reflected in the organogram below:FINANCE & ADMIN

    HUMAN RESOURCES

    CUSTOMER INFORMATION AND ITINSPECTIONS

    CLAIMS

    CHIEF EXECUTIVE OFFICER

    BOARD OF DIRECTORS

    MINISTER OF TRADE & INDUSTRY

    TRAINING DEPARTMENT

    ACCREDITATION SERVICE PROVIDERSASSESSMENT & MODERATION

    EXECUTIVE MANAGER COMPLIANCE

    EXECUTIVE MANAGER CORPORATE SERVICES

    EXECUTIVE MANAGER EDUCATION & TRAINING

    PERSONAL ASSISTANT TO CEOCOMPANY SECRETARY

    DISCIPLINARY

    STRATEGY MANAGER CEOS OFFICE

  • GROWTH OF THE INDUSTRYThe Graph below indicates the growth of the industry in the past sixteen years as represented by an increase in the number of registered estate agents:

  • GROWTH OF THE INDUSTRY Cont..This year we have 84 000 registered estate agents and 18 000 firms. Despite the increase in number of registered estate agents there has been a reduction in the number of claims lodged and paid out. This phenomenon may be due to an increase in customer awareness or the reverse in the case of new PDI first time buyers. Whatever the cause the Board continues with its awareness campaigns through the radio and other media. The following graphs reflects this trend:-

  • GROWTH OF THE INDUSTRY Cont..

    Chart5

    387

    815

    820

    1120

    598

    615

    610

    900

    1200

    805

    770

    599

    410

    200

    400

    402

    Claims Lodged

    Years

    Sheet1

    FFC ISSUED

    FIRMS

    19911992199319941995199619971998199920002001200220032004200520062007

    853490069236935597039750981492738584863989216393762710230125231610218150

    INDIVIDUALS

    19911992199319941995199619971998199920002001200220032004200520062007

    PRINCIPALS104101080811099112001134911232112041077299059820100826893787710380130221720319151

    SALESPERSON2791727935270742922029892268962445821419189282016922755153632013228034423784384864621

    TOTAL3832738743381734042041241381283566232191288332998932837222562800938414554006105183772

    CLAIMS PAID AND LODGED

    Year1991199219931994199519961997199819992000200120022003200420052006

    Claims PaidR 8,000,000R 6,000,000R 5,000,000R 6,000,000R 4,800,000R 8,200,000R 7,800,000R 7,700,000R 7,500,000R 10,800,000R 7,000,000R 5,800,000R 4,200,000R 3,800,000R 4,000,000R 4,000,000

    Claims Lodge38781582011205986156109001200805770599410200400402

    Total Passed560

    Total Failed1440

    Sheet1

    1041027917

    1080827935

    1109927074

    1120029220

    1134929892

    1123226896

    1120424458

    1077221419

    990518928

    982020169

    1008222755

    689315363

    787720132

    1038028034

    1302242378

    1720343848

    1915164621

    Sales Persons

    Principals

    Year

    Total Number

    Fidelity Fund Certificates Issued: Estate Agents

    Sheet2

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Total Number of Individuals

    Year

    Total Number of Agents

    Fidelity Fund Certificates Issued: Agents

    Sheet3

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Claims Lodged

    Years

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Claims Paid Out

    Years

    Chart6

    8000000

    6000000

    5000000

    6000000

    4800000

    8200000

    7800000

    7700000

    7500000

    10800000

    7000000

    5800000

    4200000

    3800000

    4000000

    4000000

    Claims Paid Out

    Years

    Sheet1

    FFC ISSUED

    FIRMS

    19911992199319941995199619971998199920002001200220032004200520062007

    853490069236935597039750981492738584863989216393762710230125231610218150

    INDIVIDUALS

    19911992199319941995199619971998199920002001200220032004200520062007

    PRINCIPALS104101080811099112001134911232112041077299059820100826893787710380130221720319151

    SALESPERSON2791727935270742922029892268962445821419189282016922755153632013228034423784384864621

    TOTAL3832738743381734042041241381283566232191288332998932837222562800938414554006105183772

    CLAIMS PAID AND LODGED

    Year1991199219931994199519961997199819992000200120022003200420052006

    Claims PaidR 8,000,000R 6,000,000R 5,000,000R 6,000,000R 4,800,000R 8,200,000R 7,800,000R 7,700,000R 7,500,000R 10,800,000R 7,000,000R 5,800,000R 4,200,000R 3,800,000R 4,000,000R 4,000,000

    Claims Lodge38781582011205986156109001200805770599410200400402

    Total Passed560

    Total Failed1440

    Sheet1

    1041027917

    1080827935

    1109927074

    1120029220

    1134929892

    1123226896

    1120424458

    1077221419

    990518928

    982020169

    1008222755

    689315363

    787720132

    1038028034

    1302242378

    1720343848

    1915164621

    Sales Persons

    Principals

    Year

    Total Number

    Fidelity Fund Certificates Issued: Estate Agents

    Sheet2

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Total Number of Individuals

    Year

    Total Number of Agents

    Fidelity Fund Certificates Issued: Agents

    Sheet3

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Claims Lodged

    Years

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    0

    Claims Paid Out

    Years

  • TRANSFORMATIONThe industry remains largely untransformed, 96% white and about 4% Blacks (Africans, Coloureds, Indians). As part of its contribution towards transformation the Board was one of the founding members of the Property Sector Transformation Charter Process R350 000 contribution. The Property Charter Council is currently housed at the EAAB offices. The Board also provided office furniture and fittings, two computers and one fax as well as monthly secretarial support costs of the PCC totalling to R342 375 per annum.

  • CORPORATE GOVERNANCEA Board of Directors has since been appointed by the Minister following the dissolution of the previous one. The new Board held its induction meeting on Monday and Tuesday (10 & 11 September 2007) this week.

  • CORE FUNCTIONS OF THE BOARDThese emanate from the Act and remain unchanged until the Act is either changed or amended.

    A review process was undertaken by DTI in this regard last year we await its finalization.

    Key elements to be reviewed include:Enabling the Board to increase fees by regulation.To appoint the CEO as an ex-officio member of the Board.Giving Board decisions on disciplinaries the legal status of a court award.

  • CORE FUNCTIONS OF THE BOARD Cont..Regulation in the public interest through:- Registration;Education / Exams;Disciplinaries;Claims (Fidelity Fund);Inspections;

  • We have implemented SAP CRM system to manage financial and business systems of the Board.

    Disciplinary hearings 390 Cases were heard resulting in 242 convictions, 41 acquittals, 63 withdrawals and 44 settlements.

    ACHIEVEMENTS FROM JANUARY 2007 TO 30 AUGUST 2007

    Chart4

    1209071013

    270152563428

    Cases heard

    Convictions

    Withdrawals

    Settlements

    Acquitals

    Months

    No. of cases

    Disciplinary Hearings

    Sheet1

    DISCIPLINARY HEARINGS

    Cases heardConvictionsWithdrawalsSettlementsAcquitals

    Jan-Apr1209071013

    May-Aug270152563428

    Sheet1

    Cases heard

    Convictions

    Withdrawals

    Settlements

    Acquitals

    Months

    No. of cases

    Disciplinary Hearings

    Sheet2

    Sheet3

  • The intent here is to professionalize the industry and make estate agency a career of choice rather than a career of last resort.

    Issues of ethics of the profession will come into play more definitively, as will the creation of a body of subject knowledge.

    The agreement between Services SETA and ourselves giving us the mandate to be the Certification Partner of the SETA has been signed.

    EDUCATION & TRAINING

  • Syllabus drafted jointly with SAQA & SETA is in place and is being finalized.

    Content Review Task Team was formed and is finalizing the review work.

    Regulations relating to the new education program submitted to the DTI have been approved and gazetted for public comment before finalization.

    Consultations have been held with training Service Providers and estate agents.EDUCATION & TRAINING Cont..

  • Accreditation Regulations for service providers are being drafted and will be finalized shortly. The new syllabus and exam will come into effect next year (2008).

    So far this year about 15 334 prospective estate agents wrote the Board Exam compared to 3 500 for the same period last year. EDUCATION & TRAINING Cont..

  • Mandate to conduct inspections derives from Section 32A of the Estate Agency Affairs Act 112 of 1976, as amended. These are done in the public interest and to protect consumers.

    To date seventeen (17) inspections have been conducted jointly with the Financial Intelligence Centre (FIC) as part of inter governmental cooperation. These were in Johannesburg, Cape Town and Pretoria. We also cooperate with SARS regarding estate agency compliance.

    The negative findings shown below are of great concern to the Board, to put it mildly.

    INSPECTIONS

  • Only one (1) agency (Gilbert Estates) was compliant with applicable sections of the Act (Sections 26, 29(a), 29(b), 32, 34(d)(1) and 34(b)(2).

    Three (3) agencies were served with notices to close down their businesses.

    Two (2) companies had submitted audit reports that contradicted the findings of the Inspections on the ground. Consequently the said companies had to withdraw their audit reports. This is not only unprofessional, it is illegal and totally unacceptable. In future the Board will apply the law on such matters.

    INSPECTIONS Cont..

  • All agencies that were illegally operating were disqualified in terms of Section 27 of the Act, because of the outstanding Auditors Reports. To date almost all of them have corrected their errors and have been re-issued with practice licenses (FFCs). In general the common trend is that of mismanagement of Trust Funds, which is illegal.INSPECTIONS Cont..

  • In terms of Section 32 read with Sec 29 of the EAAB Act of 1976, submissions of Audit Report is MANDATORY- NO ONE IS EXEMPT.

    Imperative that Estate Agents maintain TRUST Accounts in the legally prescribed manner so that they can be audited and submitted to the Board timeously.

    These should be submitted within four months of the end of the financial year Note that estate agencies CHOOSE the financial year end and inform the Board accordingly. OUTSTANDING AUDITORS REPORTS

  • Non-submission of auditors reports by principals impacts on the registration status of employees i.e. even if the individual estate agent is paid up, non submission of the Trust Account by the principals blocks the issuing of an FFC to the individual.

    Failure to submit auditors report carries a fine of R500.00.

    OUTSTANDING AUDITORS REPORTS Cont

  • The key focus areas for current financial year are reflected in more detail in the Business Plan in the Board Pack. Briefly this include the following:- Skills development and capacitation of staff Finance and registration in particular. Performance Management systems cascaded from corporate scorecard to all departments. Improvement in efficiency, turnaround times and overall customer service delivery.FUTURE PLANS

  • Education and Training alignment with the SAQA requirements and NQF standards as a way of professionalizing the industry and attracting/fast tracking entry of PDIs into the property industry. Higher frequency of claims processing, thanks to the appointment of the Board. Targeted awareness campaigns for PDIs and other stakeholders about the role of the Board. 1000 Unemployed graduates will be targeted for learnerships and will undergo SEDA entrepreneurship test.

    FUTURE PLANS Cont

  • Increasing the ratio of recoveries to claims i.e. pursue collections from errant estate agents through legal processes. One of our focal points is to improve communication with stakeholder through an sms system. We will partake in a take a girl child project. Increased communication with the DTI especially office of the DG.FUTURE PLANS Cont

  • CALL CENTRE We have addressed public complaints on this one.The average answering time has been dramatically reduced from approximately 45 to 4 minutes

    WEBSITE - Redesigned and continuously update information on our website. Display registration status and exam numbers, etc on website

    AGENT MAGAZINE - Continue to publish the Agent quarterly. Last year, Agent won the ARELLO Communications Award, competing against international publicationsCOMMUNICATION

  • We look forward to your support in these endeavours

    THANK YOU

  • QUESTIONS??

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