The Republic of Ireland’s auctioneer model of handling client money is a mirror image to that of the Irish legal profession and has come a long way in shielding client monies.
In the republic, there are quite stringent regulations around auctioneer licensing and particularly to do with client money. The establishment of the Property Services Regulatory Authority (PSRA) in 2011 here brought about significant change to auctioneering.
It’s a model that gives the ever-discerning client, both buyer and vendor, peace of mind in the knowledge that their monies are safeguarded and ring fenced in legislation.
That said, Adam’s has always maintained a client account and ensured that client monies are protected.
It makes sense to segregate client and office monies to ensure not only transparency, but also integrity in recording financially what’s yours and what’s not.
The PSRA has many safeguards in place, including what can and cannot be transferred in and out of your client account, and a requirement for balancing statements to ensure client monies are reconciled correctly.
Once the hammer falls and your auction house has been paid by the buyer, your vendor principal monies are calculated and preserved in the client account until pay-out, thus protecting the net sum due to the vendor.
It’s not sufficient to operate a client account unless it’s regulated as to its function and execution. This too is the requisite of proper management and governance in protecting client monies.
Some of the PSRA’s requirements can be quite onerous as a one-size-fits-all regulatory mandate. As fine art auctioneers and valuers, the nature and volume of our transactions and monies differ from that of our property auctioneer colleagues.
However, the scope and foundation of the client account is without doubt a cornerstone of our due diligence and regulation.
Dublin, Republic of Ireland
Badge of trust
MADAM – In last week’s ATG you asked for reader feedback on whether customers should expect auctioneers to have client accounts, so here goes.
It’s a black and white issue for auctioneers. Those auctioneers, like ourselves, who wish to give our clients confidence and protection, sign up to professional bodies such as SOFAA, NAVA Propertymark and RICS (we are members of SOFAA).
These trade bodies insist members have designated client accounts, and in SOFAA’s case customer accounts or an alternative way of protecting client funds endorsed by the association’s committee.
Anderson & Garland has had client accounts for 60 years or more.
Such accounts are increasingly being seen by consignors and buyers as an auctioneer’s badge of trust and they should absolutely expect this money – both consignor sale proceeds and buyer payments – to be ring-fenced.
Chairman and managing director
Anderson & Garland