Public Submission: Property Practitioners Bill B 21- 2018b

Publication Date:
01/31/2019 13:47:00

Select Committee on Social Services  
National Council of Provinces
120 Plein street Cape Town 

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Your ref: Pierre Venter
Direct :011 645 6717

Per email:

Dear Ms Marcelle Williams


The Banking Association South Africa (“The Banking Association”) would like to thank The Department of Human Settlements (DHS), the National Assembly Committee on Human Settlements and the National Council of Provinces select Committee on Social Services for the opportunity to comment on the above-mentioned Bill.

Who we are?
The Banking Association South Africa (The Banking Association) is an industry body representing all banks registered and operating in South Africa. Currently, The Banking Association has 33-member banks which include both South African and International banks. All licenced banks are members of The Banking Association. Our vision and role, together with our areas of focus, including a list of our members may be found on our website,

The Banking Association as the mandated association for commercial banks has had the opportunity to work very closely with the Department over the years to improve access to housing finance and to accelerate housing delivery, for which we thank you. 

The Banking Association has publicly promoted the need for all property intermediaries to be regulated, as we believe that this is in the interest of the public. We are therefore favourably dispo

Further, clause (7) of section 13 should be amended so that the Bill is applicable to the latest King report and not King III as it currently reads in the Bill. In this regard, the suggested wording is the “King Code”.  
Section 4 & 28 – Reinstatement of the Property Practitioners Ombud and the Lodging of complaints 
We believe that a Property Practitioners Ombud should be reinstated into the Bill, as an Ombud process can facilitate both a cost-effective and efficient means for having disputes resolved. By removing this section in the latest version of the Bill both consumers and property intermediaries alike will be forced to resort to the courts, which poses both cost and timeline constraints. This is particularly important for previously disadvantaged individuals and transformation within the sector as this requires such a support mechanism. 

However, an Ombud should be an independent entity that does not report to the Property Practitioners Board as this will promote fairness and equity when complaints are lodged against the Board. This is especially important where matters have not been resolved and are affecting the ability of a practitioner to continue operating and in extension, the livelihood of the practitioners in that agency become affected. This will also ensure that there is balance in respect of the role that the Ombud fulfils and is vital to fulfilment of the objects of this Bill. 

We recommend that the Property Practitioners Ombud be reinstated and that the scope of the Ombud should be extended to include complaints from intermediaries against the Board. 

We further recommend that the Property Practitioners Ombud be located within National Treasury’s planned “Super Ombud”, which Ombud will house several Ombuds’ as they relate to the financial industry. This will benefit consumers, practitioners and the regulatory authority alike, as it allows a stream lined and cost-effective process that further guarantees the independence of the Ombud. For ease of reference please find attached the National Treasury Discussion paper “A known trusted Embed system for all.”

Section 23 –Exemption from appointing an auditor
This section permits the appointment of an accountant rather than an auditor for property practitioners with a turnover of less than R2.5 million. Whilst the Bill specifics the criteria for an “auditor”, there are no criteria or definition for an “accountant”. While we recognize that the intent of this clause is to cater for small/ new entrants into the sector (reduce the cost burden of having their affairs audited), this poses a risk to consumers who entrust monies to property practitioners in the form of deposits. This may adversely affect consumers whose lives the Bill seeks to support due to fraud or malpractice. Further, this does not support the principle of “public interest”.  
We recommend that property practitioners with a turnover of under R2.5 million not be compelled to have a trust account or hold consumers monies, and that these funds could be held in an attorney’s trust account. If a property practitioner in this threshold opts to hold a trust account, we submit that they should be required to be audited by an auditor. 

If a property practitioner below the R2.5 million does not have a trust account, then their accounting records should be reviewed by a registered accountant. 

We further recommend that the criteria for qualifying accountants be liked to that of a qualifying auditor (i.e. “auditor’’ means an individual or firm registered in terms of section 37 or 38 of the Auditing Profession Act, 2005 (Act No. 26 of 2005)). 

The definition of an Independent Reviewer is provided for in Regulation 29(4) of the Companies Act No. 71 of 2008, which requires them to be registered with one of the following accounting professional bodies:

  • ACCA - Association of Chartered Certified Accountants; 
  • CIMA - Chartered Institute of Management Accountants;
  • IAC - Institute of Accounting and Commerce;
  • ICSA - Institute of Chartered Secretaries of South Africa;
  • SAICA - South African Institute of Chartered Accountants;
  • SAIPA - South African Institute of Professional Accountants;
  • SAIBA - Southern African Institute for Business Accountants.

Moreover, all other requirements as they apply to companies, such as an annual accounting review to be undertaken within 6 months of the property practitioner’s year end to take place, and the property practitioner be required to provide an annual notification to the Property Practitioners Board concerning the appointment and details of the accountant. To compliment this change, we recommend that the word “accountant” be added to areas of the Bill where this makes reference to an “auditor”.

Section 25 – Adjudication
While we welcome an adjudication process, which may reduce the burden of our courts, the Bill does not stipulate a maximum timeline for an adjudication process. This could  hinder a fair and just adjudication process, as a dispute can be held up indefinitely, due to an order being withheld.  
We recommend that a “time frame” clause be inserted into the Bill which prescribes a maximum time frame for matters being adjudicated.

Section 32 – Funds of Authority 
Section 32 list all the funds of the Authority, however fines and interest are not listed.
We recommend that fines and interest be included as a source of funds for the authority.

Section 47 - Fidelity Fund Certificates 
Section 47 proposes that a property practitioner must apply for a fidelity fund certificate and pay the prescribed fees every three years. The possession of a Fidelity Fund certificate will be a mandatory requirement for acting as a property practitioner. 

In instances where a juristic person participates as a property intermediary every director of the company will be required to be in possession of a certificate. The same applies to:
(i) All members of a close corporation; 
(ii) All trustees of a trust; and 
(iii) All partners of a partnership.”

We believe that this requirement will place an undue burden on all directors/members/trustees/partners to possess a fidelity certificate as such entities employ specialists to fulfil roles without their having any knowledge or involvement as a property practitioner e.g. a financial accountant. In addition, this will place an undue financial burden on such entities. These costs will in turn be on passed on to the consumer by such entities, which will hamper transformation.  
We recommend that at least one key individual be required to be in possession of a fidelity fund certificate. The key individual would be the individual elected by the directors/members/trustees/partners with the most knowledge/experience in the property sector and who is fulfilling the duties of a property practitioner. We therefore propose that the following definition be inserted in the Bill:

“"key individual" in relation to an authorised property practitioner, or a representative, carrying on business as - a) a corporate or unincorporated body, a trust or a partnership, means any natural person responsible for managing or overseeing, either alone or together with other so responsible persons, the activities of the body, trust or partnership relating to the rendering of any property related service; or b) a corporate body or trust consisting of only one natural person as member, director, shareholder or trustee, means any such natural person.”

Section 50 - Disqualification from issuing a Fidelity Fund Certificate
The Draft Bill proposes a long list of mandatory reasons why the Property Practitioners Board should withhold a Fidelity Fund certificate, thereby preventing intermediaries from practising and therefore earning an income. 

A number of these grounds may, depending on the circumstances, be contrary to the principle that the punishment must fit the crime and, more importantly, the Constitutional limitation of rights considerations. There is also a concern of potential abuse of processes for ultra vires reasons. Grounds based on court orders tend to hold more gravitas and be more immediately justifiable. We note that these same grounds are not reflected in the grounds for disqualification from the Board or Authority itself?
We recommend that this section of the Bill be redrafted to include commentary as per our concerns detailed above.

We further recommend that consideration be given to including this content for a Board/Authority.

Section 54 - Trusts 
In terms of Regulations in support the Banks Act No.94 of 1990, a bank may not open a trust account for a property practitioner unless they are registered with the Property Practitioners Board. Clause 54(1)(c) is therefore incorrect as it should require a property practitioner to register with the Property Practitioners Board and only to approach a bank thereafter for a trust account to be opened. 

We assume that the Property Practitioners Board would, when approving the registration of a Property Practitioner ensure that the name used for the trust account is appropriate and that the descriptor name clearly identifies that the trust account is for a property practitioner, as currently some of the name descriptors used by Estate Agents/Estate Agencies make it impossible for banks when undertaking a search of their computer database to determine that the account is in fact a trust account, or the purpose for what the account is to be used.
We recommend that the process of registering a trust with the Board and the opening of the trust account be detailed in Regulations to this Bill. This includes the need for the Property Practitioners Board to approve the descriptor name that the property practitioner intends using prior to opening the trust account. 

Section 66 – Prohibition on conduct to influence the issue of certain certificates
We submit that the list is incomplete as property owners are compelled by legislation to provide a certificate which confirms that gas and security electrical fencing is compliant.
We recommend that a clause (d) and (e) be added to this section of the Bill to include gas and security electrical fencing.
An additional clause which makes provision for new/additional certificate classes to be included within the Bill, without the need for amendments to the Bill if/when additional regulated certificate classes are introduced.  

Whilst we are fully supportive of the strategic intent of this Bill, we suggest that the above changes be included to this version of the Bill.      

Yours sincerely  

Pierre Venter
General Manager
Market Conduct Division

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© The Banking Association South Africa 2019