Handling trust money in the debt collection industry

You must use your trust account to handle money on behalf of another person.

Whenever you use your trust account, you will need to follow certain rules. These rules will help you to clearly manage and account for trust money.

Trust account receipts

Anyone who keeps a trust account must have:

• a register of trust account receipt forms, containing a record of the receipt number of each form, updated within 2 business days of a receipt being used for the operation of a trust account
• all receipts in duplicate (such as carbon paper duplicates) must be headed “Office Copy” or “Duplicate Copy”.

On each trust account receipt, you must include:

• a title that says ‘Agents Financial Administration Act 2014 – Trust Account Receipt’
• a unique receipt number (with all receipts in consecutive order)
• the name of the trust account holder (principal licensee)
• the agent’s licence number
• the date the trust money was received and the date the receipt is completed
• the name of the person completing the receipt form and if the receipt form is from a receipt book, or is a hard copy of a computer entry, the person’s signature
• the name of the person for whom the receipt is completed
• the name of, or other means of identifying, the person on whose behalf the trust money is received
• a brief description of the matter for which the trust money is received
• the amount of trust money received, expressed in figures
• how the trust money was received (such as cash, cheque, direct deposit or electronic funds transfer)
• if the trust money received is rent; the address of the rented premises and the day up to which the rent is paid
• if the trust money received is payment from a prospective buyer for an option to purchase a used motor vehicle for sale on consignment, the vehicle’s:
  • make
  • body model
  • colour
  • engine number or, if the vehicle is a caravan, the chassis number
  • identification number
  • registration number
  • built date.

Receiving payment

Each time you receive a payment of trust money electronically or in person, you must:

• make sure it is banked into your trust account before the end of the first business day
• complete a trust account receipt
• keep the duplicate copy of the receipt for your records.

Make sure the information is clear and legible on the duplicate copy.

When you fill out a receipt, you will need to:

• include your name
• identify the payee—this might be the seller or a service business
• briefly describe the reason why you received the money
• note how much money you received in numerals
• state how you received the money (such as cash, cheque, credit card or electronic transfer).

You can fill out a trust account receipt manually or electronically. You will need to sign any hard copy of a receipt (including a printout), but only if a hard copy exists.

You can identify a seller with a unique code instead of their name. This means you won’t have to give their name to the payer.

If the person paying the money is different from the person on the contract of sale, you must:

• make the receipt out to the person paying the money
• include a note that the payment was made on behalf of the names on the contract of sale.

Withdrawals

When you may withdraw funds

You can withdraw funds from a trust account in order to:

• pay authorised expenses to a third party
• pay the seller their agreed share of the sale price or rent monies
• claim your fees, charges and commissions, as outlined in the original Appointment.

The client of the agent for the transaction (or their representatives) must authorise this in writing.

For a payment as a deposit or final purchase price, you must:

• only withdraw it when the transaction is finalised (settled or terminated)
• pay the seller their share of the proceeds first or simultaneously with any other parties
• only withdraw your own fees or commissions after making all other payments.

For a payment for a specific purpose (such as marketing), you must:

• store it in your trust account until the appropriate time when you are authorised to use it
• only withdraw it to use at that time and for that purpose.

Contact the Public Trustee if you can’t find the rightful recipient of money in your trust account. They will advise you where to send it.

For more information about disputes with trust money and emergency transaction expenses, see our trust account guide.

How to distribute funds

You must distribute all trust money directly from the trust account. It is illegal to transfer money to recipients via a general account.

If your bank does not allow this, you can:

• negotiate with your bank to allow EFT functions
• consider changing banks
• pay by cheque from the trust account.

When paying out trust money by cheque, you must record the:

• date the cheque was drawn
• payee’s name
• person on whose behalf the cheque is drawn
• reason the cheque is being drawn
• amount of the payment.

When paying out trust money by EFT, you must obtain and keep a transaction report from your bank and record the:

• details of the payment
• amount of the payment
• name and number of the account to which the money was paid.

When paying out trust money using a bill payment platform, if the account number to which the money is being paid is not available, you must record the:

• name of the person to whom the money is paid
• name of the bill payment platform
• unique transaction reference for the payment.

You must provide a written account to your clients for all money received within 42 days of the transaction being finalised. If a written account is requested in writing, you must provide this within 14 days of receiving the request.

Your records

You must keep your trust account records for 5 years.

Your trust account records must include:

• a deposit book of trust account deposit forms in duplicate
• a cash book
• a journal of consecutively numbered folios
• a ledger.

You must also keep:

• full and accurate accounts of all money you pay or receive for a transaction
• all books, accounts and records in a way that is easy to audit.

Computerised accounting systems

If you use a computerised accounting system to manage your trust account records, you must ensure it:

• does not allow the deletion of a trust ledger account
• records any changes to transaction records
• produces records in chronological order.

You must make sure the system is capable of recording changes to the:

• name and address of the person for whom trust money is held
• amount of trust money held for a person
• financial institution account number of a trust account.

The computerised system must also:

• have enough backup capability to record the required information
• be backed up at least once a month and kept at a separate premises.

Trust book reconciliation

At the end of each month you must reconcile you trust account book with your trust ledgers and a bank statement. This must be completed within 5 days after the end of the month.

For more information on how to reconcile trust account records, cash books and ledgers, see our trust account guide.