Mossgreen collapse highlights importance of Trust Accounts
22 January, 2018: The Auctioneers and Valuers Association of Australia (AVAA) has said today that all auctioneers should be maintaining Trust Accounts to protect vendors in the event of trading and solvency issues, following reports that proceeds from Mossgreen’s auctions not held in trust will be repaid to creditors in order of overall priority.
“While Mossgreen is not a member of AVAA, the uncertainty now surrounding repayments to vendors for items already sold reiterates the importance of maintaining Trust Accounts for corporate and sole trader auctioneers,” AVAA President, Tim Slattery, said.
“The regulation for auctions is varied across Australian States and territories, with Queensland requiring auctioneers hold a Trust Account, whereas New South Wales, Victoria and Western Australia don’t require it. This is why the AVAA has moved to introduce mandatory requirements for all members”
As part of its role to ensure the highest professional standards among auctioneers and valuers, the AVAA has an established Code of Conduct that requires members to maintain a Trust Account that is subject to an annual audit. Furthermore, the AVAA requires its members have professional indemnity insurance in place to provide assurance to clients should there be negligence on behalf of valuers,
As such, the AVAA recommend that vendors only engage an AVAA member to ensure that the necessary safeguards are in place regarding security of sale proceeds, transparency, professionalism and professional indemnity insurance.
“While it is disappointing to see a local, well-regarded auction house encounter financial difficulties, not holding sale proceeds in trust has removed basic protection for vendors, who will now rank amongst other unsecured creditors,” Mr Slattery said.
“It is a requirement for all our members to run audited Trust Accounts, which we review annually, so vendors can be assured that the necessary safeguards are in place if they have items under consignment with AVAA member auctioneers.”
“We would encourage any vendor considering engaging a valuer or an auctioneer to ensure that professional is an AVAA member so they can benefit from the AVAA’s stringent requirement for audited trust account and professional indemnity insurance coverage,” Mr Slattery added.
For more information contact:
Tim Slattery, President, AVAA
M: 0407 901 070
About the Auctioneers and Valuers Association of Australia (AVAA)
The AVAA was established in 1953 and is an industry based, self-governing body representing its membership that comprises Corporations, Sole Traders, Auctioneer, Valuer, Associate and Life members. AVAA members are committed to providing the highest levels of professionalism in their dealings with clients.
All categories of members must be practising Auctioneers and/or Valuers, and are bound by the AVAA’s Code of Ethics. The AVAA is governed by a Constitution ratified by The Australian Securities and Investments Commission. For further information visit www.avaa.com.au.