Deposit-flicking may look like an attractive shortcut around rising admin costs — but it risks betraying one of our legal systems oldest principles of law: a fiduciary holding someone else's money is there to safeguard it, not to profit from it
Operating a trust account, be it as a lawyer or a real estate agent, is fundamentally a fiduciary undertaking. That is, you are holding someone else’s money as trustee for them. It is not yours to deal with.
This is quite different from an ordinary deposit at a bank. There, the deposit technically belongs to the bank, albeit as a debt they owe to the depositholder. If a bank becomes insolvent, a depositholder is just an unsecured creditor (subject to deposit-guarantee schemes).
Meanwhile, trust monies held by a lawyer or an agent never actually belong to them. The beneficial interest always vests in the person on whose behalf the deposit is held.
Operators of a trust account are therefore held to a far stricter standard than ordinary account operators: the money is theirs to safeguard, never theirs to exploit.
In one of the best-known statements on the law of trusts Lord Herschell said in Bray v Ford [1896] AC 44 that "It is an inflexible rule of a Court of Equity that a person in a fiduciary position… is not… entitled to make a profit." His Lordship further stated that a fiduciary “is not allowed to put himself in a position where his interest and duty conflict.”
Those important principles should carry across verbatim to those who operate a trust account today, as they are perhaps the quintessential example of someone subject to a fiduciary obligation.
However, the lines often get blurred when it comes to a fiduciary passing on administrative costs in handling trust monies versus making a profit on those funds.
Nowhere is that blurriness being exploited more right now than with the phenomenon of ‘deposit-flicking’.
Deposit-flicking refers to where a real estate agent, being the nominated stakeholder under a property contract, transfers or directs the deposit to be paid by the purchaser to another entity to hold on the agent’s behalf until settlement.
Assuming for a moment that it is legal for an agent to ‘flick’ a deposit to another party (noting that it probably isn’t!), one might ask: ‘what is wrong with that?’
The agent is not profiting from the exercise, at least not directly. They are just dealing with a burdensome administrative cost – right?
It’s an appealing argument for some agents feeling the crunch of increasing costs everywhere – but it does not hold water.
You don’t have to be a cynic to realise that those businesses offering the deposit-flicking services aren’t just doing it for the love of the game. They are absolutely in the pursuit of profit and agents who have flicked the deposit to them become complicit in that.
The ‘deposit-flicking’ businesses operating at the moment appear to be profiting from trust monies in a range of different ways.
For example, some are simply investing the deposit and keeping the interest rather than distributing it to the parties to whom the deposit belongs.
Others have more opaque ways of making money, using the deposit as a way of leveraging other services to the agent and clients, like AML-CTF checks, marketing funding and even financing early payment of commission.
Shockingly, my firm has seen examples firsthand of where the agent who has flicked a deposit has received his commission payment prior to the vendor authorising a release of funds at settlement.
Even more troubling is the possibility that deposit-flicking companies are using their position to mine and exploit customers' data — a practice that some of them openly acknowledge in their terms and conditions.
Some of these companies insist on being invited into the PEXA Workspace to settle the transaction, even though they represent neither buyer nor seller, an entirely new and unnecessary complication for conveyancers to arrange. The concern is that these companies are seeking entry to PEXA for no reason other than to access the lucrative financial data the platform holds — loan amounts, lender identities, and the equity each party holds in the property.
With the advent of deposit-flicking, and absent any action from the regulator, it seems we have strayed far from Lord Herschell’s solemn edict to fiduciaries. Once seen as an almost sacred earnest to secure a transaction, it seems customers’ deposits are now hot property and up for grabs.
But is Lord Herschell’s edict actually relevant today, 130 years later in a world that prizes innovation and cost efficiencies?
Interestingly, Lord Herschell’s reasoning for putting the shackles on trustees had less to do with 19th century morality and more to do with something we still very much have to deal with today: human weakness.
His Lordship said: “It does not appear to me that this rule is… founded upon principles of morality - [instead] human nature being what it is, there is danger… of the person holding a fiduciary position being swayed by interest rather than by duty" and concluded "it has… been deemed expedient to lay down this positive rule."
Unfortunately, the inherent weakness in human beings which Lord Herschell identified in 1896 still exists today - and sometimes it seems even more pronounced. The largest Ponzi scheme in human history happened less than 20 years ago when Bernie Madoff abused his position as fiduciary and misappropriated $65 billion of his customers’ monies.
In NSW, Fair Trading reports that it had disciplined 50 real estate agents over a 12-month period in 2025-2026 for trust account misappropriation resulting in over $200,000 in penalties, 34 businesses facing licence suspension, and three industry bans. Thankfully, in NSW (like in other states and territories), customers whose monies have been stolen by rogue agents do have recourse to a fidelity fund.
And while treating trust money as a solemn fiduciary duty will never completely shield deposits from bad actors, throwing the gates open entirely to the profiteers will almost certainly result in the kind of abuse that Lord Herschell was concerned with.
The ‘deposit-flicking’ issue has been a live one in the industry for almost a year now, particularly in NSW. Industry submissions have been made, and voices have been heard (and in some cases have tried to be silenced). However, the regulator has not yet made its position known.
For an industry already battling with its reputation, there really is only one answer here. Let’s hope we get it soon.
About the author: Jared Zak is the founder and principal solicitor of Dott & Crossitt Solicitors + Conveyancers, the largest conveyancing company in New South Wales. In July this year, a company involved in deposit-flicking called Agency Settlements sought an injunction against Jared to restrain him from saying that their business model was illegal. The Supreme Court of NSW declined to make that injunction and awarded costs against Agency Settlements, allowing Jared to speak freely about his concerns with the practice, which he has done here.