Compulsory Continuing Professional Development

Overview

The Real Estate Institute of Queensland (REIQ) is committed to cultivating and maintaining the highest professional standards in the Queensland real estate sector. As part of this commitment, since 2005 the REIQ has required its members to undertake Continuing Professional Development (CPD) as a condition of membership. This ensures that our members have up-to-date understanding of consumer protections and other laws governing the conduct of real estate professionals and the transactions they facilitate. However, while the REIQ represents approximately 4,000 individual members and 1,600 agency offices, there are a large number of real estate practitioners outside the REIQ membership who undertake no ongoing education, and may have a limited understanding of changes in the law.

For this reason, the REIQ supports a state-wide system of compulsory CPD, as a condition of holding and renewing a real estate licence or registration. This will ensure all real estate practitioners can deliver the highest level of service to clients and consumers, and will enhance the integrity of the profession in Queensland. The REIQ also proposes to continue providing CPD training to all members free of charge.

Background

In order to become a licensed real estate agent or registered salesperson in Queensland, an individual must complete a nationally accredited training course, and pass a range of rigorous background checks. However, once these initial educational requirements are completed and the licence or registration is granted, there is currently no requirement for any further training or professional development as long as that person’s licence or registration remains current.

Although real estate practitioners are not required to be legal experts, in order to perform their job, it is essential that they are abreast of relevant legislation and any updates to the law.  In Queensland, real estate agents are governed by a number of legislative Acts, including but not limited to the following:

• Property Occupations Act 2014 (QLD);
• Residential Tenancies and Rooming Accommodation Act 2008 (Qld); and
• Agents Financial Administration Act 2014 (QLD).

Further, there are numerous other pieces of legislation such as, amongst others, the Queensland Civil and Administrative Tribunal Act 2009 (Qld), that from time-to-time a real estate agent may encounter in their daily work.  It is difficult to believe that every single agent in Queensland is able to keep fully up-to-date with changes to laws governing the real estate sector without any form of structured formal training.  This poses a significant risk to ordinary Queenslanders who, when engaging a real estate practitioner, may end up receiving material advice that is incorrect.

Potentially, a person who was granted a real estate agent’s licence or registration in Queensland in the 1970s could be operating today, without ever having to undertake any further education.  And yet in the last 40 years, the law governing real estate practitioners and protecting consumers has been amended frequently and, in some cases, very significantly.

The need for compulsory CPD is further underlined by the perception that many consumers hold of real estate professionals.  A 2015 Roy Morgan survey found that only 9% of those polled rated the ethics and honesty of real estate agents as either ‘very high’ or ‘high’, with only advertising people and car salesman scoring a lower level of trustworthiness¹.  Legislation requiring agents to undertake CPD in order to maintain their licence would result in higher standards in the sector and in turn would help improve the reputation of agents in Queensland.

The REIQ believes compulsory CPD would be beneficial to the real estate profession and the Queensland public in the following ways:

• it will assist real estate practitioners to maintain and enhance the professionalism of the service they provide by ensuring that they are up-to-date with their knowledge of existing laws;
• it will result in fewer errors committed by practitioners, and therefore a reduction in disciplinary proceedings;
• experience in other states indicates it leads to an increase in consumer satisfaction;
• it will give consumers greater confidence in the sector;
• it will reduce the number of claims made against The Claim Fund established under the Agents Financial Administration Act 2014 (Qld) resulting in fewer professional indemnity claims that currently cost the Queensland community millions of dollars each and every year;
• it will bring Queensland into line with five other Australian states and territories that have already established a compulsory CPD program, or are in the process of doing so; and
• it will enhance the general reputation of the industry in the eyes of the public.

Making a CPD Scheme Work for Queensland

The REIQ already requires its members to undertake CPD training in order to maintain their membership.  In 2016 alone, the REIQ terminated the membership of roughly 230 members who failed to complete the relevant CPD training.  It is concerning to think of how many more agents throughout Queensland in 2016 – who would not have been subject to the same requirements – failed to undergo any form of CPD training at all.

Therefore, we believe there are sound reasons for extending this requirement to the entire sector.  An examination of all disciplinary proceedings against real estate agents since 2013 shows that not once has an REIQ member been found guilty of breaching the relevant legislation.  It is our view that this is because they generally have a better understanding of current laws and best practice, gained through their participation in CPD activities.  We also believe this commitment to industry best practice instilled in our members during their training flows through to the culture of their businesses and their approach to client interactions.  This highlights the effectiveness of CPD in ensuring that those operating in the sector have an impeccable level of knowledge and understanding of existing laws.

Moreover, real estate agents that the REIQ engage with are overwhelmingly in favour of mandating compulsory CPD for all agents throughout Queensland.  In 2016 the REIQ conducted a survey of real estate agents, posing the following two questions:

1. Do you think it is important that real estate agents maintain a level of professional knowledge?
2. Do you think that education requirements for real estate agents are too low?

In an emphatic outcome, all 229 respondents answered ‘yes’ to both of these questions, making it a unanimous result.  This result not only indicates the fact that real estate agents would like to see compulsory CPD introduced, but also that REIQ members clearly value the CPD training they are required to undertake and do not view it as an unnecessary burden.

Compulsory CPD operates to clean out individuals who do not complete relevant training by ensuring that all practising real estate practitioners stay abreast of the law.  It also acts as a deterrent for people to operate in the sector who have not maintained the required CPD training by imposing stringent penalties on offenders – up to and including loss of licence.

The REIQ believes a compulsory CPD scheme for Queensland real estate practitioners could be implemented without significant additional cost to government or red tape for the sector.  Currently, real estate practitioners are required to apply to renew their licences or registration either annually or every 3 years, and pay a renewal fee to the State Government.  The REIQ proposes that all licensed agents and registered salespersons would, as part of the renewal process, be required to demonstrate they have satisfied their annual CPD requirements in the previous year/s.

The claim fund and professional indemnity claims

The Claim Fund established under the Agents Financial Administration Act 2014 (Qld) is limited to $200,000 and can be made in relation to property or land, if an agent:

• does not deal with trust money properly;
• fails to advise that they had a financial interest (beneficial interest) in the property that was sold;
• makes a false or misleading statement;
• advises that they have received a payment from someone else, when they have not; and
• steals or misapplies money or property given to them to pass on to someone else (such as transfer of rental bond).

The 2016/17 Annual Report from the Queensland Department of Justice and Attorney General revealed that $5.6 million was obtained to fund consumer redress.  Moreover, the report also noted that in past 3 years the Office of Fair Trading (OFT) has obtained in excess of $17 million in redress for consumers, including $6 million in 2015/16, and $6.1 million in 2014-15².

The REIQ believes that the introduction of compulsory CPD would help to reduce the amount of claims made against the fund.  Ongoing education would result in agents who have a more acute understanding of the laws they are working under and in turn see the OFT using less money to fund consumer redress.

Further, professional indemnity (PI) claims made against real estate agents cost the Queensland community millions of dollars each year.  PI claims have been on the rise in Queensland in recent years and it is estimated that around 60% of PI notifications on claims relate to property management³.  The most effective way to combat this growing trend of PI claims is to educate all real estate agents across Queensland on how to adequately safeguard themselves against any claims that are made against the services they provide.  Compulsory CPD training would teach agents how to implement procedures to address PI claims and minimise the risk of a potential claim being made against them.  Accordingly, through better training and education, the REIQ firmly believes that this would result in a significant reduction in the number of PI claims made in relation to the real estate sector.

Compulsory CPD - The interstate experience

As previously mentioned, compulsory CPD for real estate practitioners is already in place in a number of Australian states and territories including:

• New South Wales;
• Western Australia;
• Tasmania;
• Northern Territory; and
• Australian Capital Territory.

Compulsory CPD for real estate practitioners also exists in New Zealand.

Western Australia

According to a Report from the Real Estate Institute of Australia in October 2012, compulsory CPD has had a very beneficial impact in Western Australia.  In 2007 compulsory CPD was introduced for licensees and then for sales representatives in 2009.

In the five years leading up to and including 2009, the average number of written concerns received by the Real Estate Institute of Western Australia (REIWA) was 143 per annum.  However, in the year (2010) following the implementation of compulsory CPD, the number of written concerns fell by 70% to a mere 58 written complaints.  Moreover, the average for the first three years to 2012 was 55 complaints, constituting a reduction in written complaints of 61 per cent⁴.

New South Wales

In New South Wales, CPD under the Property, Stock and Business Agents Act 2002 (Qld) contains a set of specialist topics for each of the licence and certificate of registration categories that NSW Fair Trading consider to be of high risk.  For instance, this includes recommended risk areas such as trust accounting and audit requirements, risk management and legislation⁵.

In 2016, NSW Fair Trading released a report entitled A review of training for licensed occupations in the New South Wales property services industry in which it sought feedback on compulsory CPD for the sector in NSW.  It stated that a ‘majority of stakeholders who responded to this review supported continuing professional development (CPD) as a valuable tool for the dissemination of knowledge and the maintenance of skills’⁶.  In line with the 2016 survey facilitated by the REIQ, this highlights the value that the overwhelming majority of property stakeholders place on compulsory CPD and the benefits it provides to the sector.

In April 2017, an audit on CPD compliance by NSW Fair Trading found that 68 people operating in the real estate industry had failed to comply with laws regarding CPD.  These agents were dealt with by the authorities under the relevant laws, ensuring the integrity of the state’s CPD system.  However, the fact that a state with compulsory CPD can produce such a high level of agents who fail to educate themselves about changes to the industry leads to the conclusion that a state such as Queensland would have even more practitioners failing to undertake some form of professional development⁷.

New Zealand

New Zealand already has an onerous compulsory CPD program in place for all real estate practitioners.  It requires all people operating in the sector to undertake CPD training that consists of 10 hours of verifiable training and 10 hours of non-verifiable training⁸.

Under the New Zealand compulsory CPD regime, verifiable education is delivered via approved organisations where an agent chooses a provider and selects from classroom-based, correspondence or e-learning options.  Once an agent has undertaken the verifiable training, they are required to submit the details directly to the Real Estate Agents Authority (REAA).

Non-verifiable training does not need to be conducted by an approved organisation but records are required to be kept, and may comprise attending industry conferences; in-house training provided by agencies; IT courses; and attending seminars about Council by-laws.

The rigorous CPD criteria in place in New Zealand is well above what the REIQ is advocating to be implemented in Queensland, however, it does demonstrate the high standards that are in place in nearby jurisdictions.

Industries in Queensland with Compulsory CPD

Numerous industries spanning the Queensland economy already have in place some form of mandated CPD.  Examples in Queensland include, but are not limited to, the following:

• legal profession;
• qualified accountants
• teaching;
• medical profession;
• architecture;
• engineering;
• pool safety inspectors.

We believe that if these industries and professionals can make a CPD system work for the benefit of consumers, the real estate sector can as well.

Summary

REIQ is proposing that real estate practitioners be required to complete at least 7 hours of annual CPD as part of their licensing or registration renewal process.  This requirement could be applied without the implementation of significant public resources to support it.

Although governments are generally reluctant to impose new measures that could be viewed as business “red tape”, a measure such as this that has the support of the peak industry body should be achievable.

^{1) https://www.corelogic.com.au/news/perceptions-of-real-estate-agents#.WguuXhOCz-Y}

^{2) http://www.parliament.qld.gov.au/documents/tableOffice/TabledPapers/2017/5517T1847.pdf}

^{3) https://www.youtube.com/watch?v=AWw7GStTCH4}

^{4) https://reia.asn.au/wp-content/uploads/2014/03/Nationa-Licensing-RIS-submission-2012.pdf}

^{5) https://opus.lib.uts.edu.au/handle/10453/19378http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Training_for_licensed_occupations_in_NSW_property_industry_report__June_2016.pdf}

^{6) https://www.finance.nsw.gov.au/about-us/media-releases/one-five-real-estate-agents-not-updating-education}

^{7) http://www.reaa.govt.nz/ForLicensees/MaintainingYourLicence/Continuing-education/10-10-continuing-education/Pages/10-10-continuing-education.aspx}