Agency compliance systems have been called into question following recent scandals involving trust account fraud.
Coral Sea Property Management principal Shaun Podbury said an agency is more likely to be susceptible to fraudulent trust account activity if it doesn’t specialise in rentals.
“The property management department can sometimes get shoved away on its own and there isn’t the oversight that perhaps there should be,” he told Residential Property Manager.
“I think the opportunity in those areas is higher for someone to manipulate the trust account.”
Mr Podbury said the key to preventing trust account abuse is to establish robust internal reporting systems.
“Everyone is aware that there can be tampering with a trust account, but with your reporting system you can almost prevent tampering by employees and I think it certainly has improved much more than it was 10-15 years ago,” he said.
Real Plus business manager Hermione Gardiner said it is challenging for an agency to find a balance between policing every transaction and giving PMs the freedom to manage their portfolio.
“I would say there need to be tighter checks and balances in place for any transactions going to an account that is not the listed account on the client’s agreement, especially with bond refunds and one-off transfers,” she said.
“Regular creditor audits are also necessary to eliminate any potential dummy accounts that have been set up to traffic trust funds.”
M Residential head of property management Laura Levisohn said fraud appears to have gotten worse, and that this is damaging the industry’s reputation.
“It’s time for the industry to make a very strong stance here and publicise the consequences of such acts so that the public are aware that this is not tolerated,” she said.
Ms Levisohn also told Residential Property Manager that she didn’t understand how fraud could go undetected for long periods of time.
“At the end of the day the trust money belongs to someone else, so either tenants’ rent is not up to date – even though they paid – or if the date has been manipulated then the owner will be knocking on the door to say where is the money?”