Queensland Auctioneers and Agents Act 1971 & Regulation ...ncp.ncc.gov.au/docs/Qld Auctioneers & Agents

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    Department of Equity & Fair Trading NCP Review of the Auctioneers and Agents Act May 2000

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    Contents

    Executive Summary 4 1 Introduction 8

    1.1 Introduction 9

    1.2 Objectives of the Legislation 10

    1.3 Scope of the Review 10

    1.4 Report Structure 11

    2 Review Methodology 12 2.1 Project Methodology 13

    2.2 Alternatives to the Act 14

    3 Real Estate Agents 16 3.1 Market Profile 17

    3.2 The Act Supporting the Base State 21

    3.3 Impacts of the Base State 24

    3.4 The Proposed Bill 43

    3.5 Impacts of the Proposed Bill 43

    3.6 Negative Licensing 52 3.7 Impacts of Negative Licensing 52

    3.8 The Hybrid Model 57

    3.9 Stakeholder Positions 59

    4 Auctioneers 65 4.1 Market Profile 66

    4.2 The Act Supporting the Base State 70

    4.3 Impacts of the Base State 72

    4.4 The Proposed Bill 78

    4.5 Impacts of the Proposed Bill 79

    4.6 Negative Licensing 85

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    4.7 Impacts of Negative Licensing 85

    4.8 The Hybrid Model 89

    4.9 Stakeholder Positions 91

    5 Motor Dealers 94 5.1 Market Profile 95 5.2 The Act supporting the Base State 98

    5.3 Impacts of the Base State 99

    5.4 The Proposed Bill 105

    5.5 Impacts of the Proposed Bill 105

    5.6 Negative Licensing 110

    5.7 Impacts of Negative Licensing 110

    5.8 The Hybrid Model 114

    5.9 Stakeholder Positions 114

    6 Pastoral Houses 117 6.1 Market Profile 118

    6.2 The Act supporting the Base State 119

    6.3 Impacts of the Base State 121

    6.4 The Proposed Bill 126

    6.5 Impacts of the Proposed Bill 126

    6.6 Negative Licensing 130

    6.7 Impacts of Negative Licensing 130

    6.8 The Hybrid Model 133

    6.9 Stakeholder Positions 133

    7 Commercial Agents 134 7.1 Market Profile 135

    7.2 The Act supporting the Base State 137

    7.3 The Base State 139

    7.4 The Proposed Bill 143

    7.5 Impacts of the Proposed Bill 143

    7.6 Negative Licensing 146

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    7.7 Impacts of Negative Licensing 146

    7.8 Conclusion 149

    7.9 Stakeholder Positions 149

    8 Conclusions 151 8.1 Base State Assessments 152 8.2 The Proposed Bill Impacts 152

    8.3 Negative Licensing Impacts 153

    8.4 The Hybrid Model 154

    Appendices A Terms of Reference & Proposed Bill Policies 156

    B Consultation Participants 168

    C Interstate Regulation 170

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    Executive Summary

    Background

    The Auctioneers & Agents Act 1971 and the Auctioneers & Agents Regulation 1986 governs occupations in the following industries: • real estate agency • auctioneering • motor dealing • commercial agency • pastoral houses. The restrictions placed on occupations in these industry groups include barriers to entry (via a system of positive licensing featuring numerous entry requirements) and conduct restrictions on the activities of service providers. The Mutual Recognition (Queensland) Act 1992 also applies to these occupations and provides registrants from other States and Territories with a similar registration entitlement to practice in Queensland, thereby facilitating freedom of movement of service providers in a national market. A review of the legislation was required to be undertaken to meet the Queensland Governments obligations under National Competition Policy (NCP) which requires the review, and where necessary the reform by the year 2000, of all legislation containing restrictions on competition. The guiding principle of NCP, as set out in Clause 5(1) of the Competition Principles Agreement (CPA), is that legislation should not restrict competition unless it can be demonstrated that: • the benefits of the restriction to the community as a whole outweigh the costs • the objectives of the legislation can only be achieved by restricting competition. The key stakeholders to the review include: • consumers; including vendors, buyers, renters and the wider community • industry; including each of the broad occupational groups in each of the industries

    above • Government; including the Department of Equity and Fair Trading and other

    Government departments where relevant. Stakeholder positions expressed during the review process are addressed in detail in the body of the main report.

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    Legislation Objectives The single objective of the legislation, as detailed in the Public Benefit Test (PBT) plan developed by the Department of Equity and Fair Trading, is to comprehensively provide for consumer protection. For the purposes of the review process, consumer protection was the sole objective against which any restrictions on the occupation groupings were assessed, having regard also to Clause 5(1) of the CPA. Alternative Options A number of regulatory alternatives were subjected to the Public Benefit Test process to identify their overall incremental net benefit/cost over the base state (status quo) and their ability to satisfy the consumer protection objective of the legislation. For this review, the list of options considered included: • retention of the status quo or base state (a positive licensing system) this is implicit

    as an option should there be no net public benefit from any of the options to be considered.

    • the proposed Bill (currently developed by the Department of Equity and Fair Trading to policy stage only)

    • negative licensing (removal of up front barriers to entry). Each option is described in detail in the main body of the report. Conclusions The option expected to achieve the greatest net public benefit, and that supports the consumer protection objective of the legislation, is a hybrid model developed from the beneficial elements identified in the PBT. This hybrid model differs for each industry as outlined below. The recommended hybrid model for real estate agents includes: • relaxation of age requirements • removal of residency requirements • substitution of suitability assessment for character and fitness tests • relaxation of business premises standards to include any registered office • maintenance of requirement for a license holder to operate at principal office • introduction of a 60 day time limit on individual or sole exclusive agency

    arrangements • removal of the managers license which will be rationalised into the general license • introduction of competency assessment including recognition of prior learning

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    • inclusion of developers and real estate marketers within the scope of the legislation • introduction of a requirement that agents can act for only one party • retention of the requirements for salespeople to sit a test approved by the licensing

    authority • removal of maximum commissions on sales and rentals subject to monitoring and

    transitional arrangements including disclosure, information and education campaigns

    • allowing restricted letting agents to manage contiguous buildings. It should be noted that the removal of maximum commissions is recommended to be co- ordinated with the introduction of a public education campaign. The recommended hybrid model for auctioneers includes: • relaxation of age requirements • removal of residency requirements • substitution of suitability assessment for character and fitness tests • relaxation of business premises standards to include any registered office • introduction of competency assessment including recognition of prior learning • deregulation of regulated maximum commissions • exemption from trust accounting provisions where auctioneers act as del credere

    agents • no maximum cap on buyers premium commissions. The recommended hybrid model for motor dealers includes: • relaxation of age requirements • removal of residency requirements • removal of maximum commissions on vehicles sold on consignment • relaxation of business premises standards to include any registered office • substitution of suitability assessment for character and fitness tests • introduction of competency assessment including recognition of prior learning • rationalisation of motor dealer managers license. It is recommended that cooling off periods and statutory warranties for used motor vehicles should be introduced as part of the hyrbid model as a net benefit has been identified during the PBT from the additional regulatory requirements.

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    The recommended hybrid model for pastoral houses includes: • relaxation of age requirements • removal of residency requirements • substitution of suitability assessment for character and fitness tests • removal of work experience requirements • introduction of a requirement that agents can act for only one party (except livestock

    auctions) • relaxation of busines