Changes to licensing and obligations for commercial agents in NSW
From 1 July 2022, new laws apply for the licensing and regulation of commercial agents in New South Wales. Commercial agents collect debts, repossess goods, and serve legal documents on behalf of their clients. The primary change is that commercial agents and commercial agent licences will now be regulated by NSW Fair Trading.
Regulation of commercial agents
On 29 June 2022, the Minister for Fair Trading announced that Schedule 1 of the Fair Trading Amendment (Commercial Agents) Act 2016 (NSW) (Commercial Agents Act) would commence on 1 July 2022, triggering the commencement of the Fair Trading Amendment (Commercial Agents) Regulations 2022 (NSW) (Commercial Agents Regulations).
The Commercial Agents Act amends the NSW Fair Trading Act 1987 (NSW), bringing commercial agents under the regulation of NSW Fair Trading as of 1 July 2022.
Prior to this date, NSW Police were responsible for the regulation of commercial agents under the Commercial Agents and Private Inquiry Agents Act 2004 (NSW) (CAPI Act).
Licensing requirements
There is only one licence available under the new regime – a ‘commercial agent licence’ which enables a licence holder to perform all commercial agent activity.
Licences for commercial agents will be administered by NSW Fair Trading. Individuals and corporations can apply for a commercial agent licence on the NSW Fair Trading website.
Only commercial agents who are classified as field agents and employers of field agents are required to hold a commercial agent licence under the new regime.
Field agents and employers of field agents require licences in order to perform debt collection, process serving and repossession of goods.
Commercial agents can apply for 1 year, 3 year or 5 year licences.
To be granted a commercial agent licence you must not be a disqualified person and you must be fit and proper to hold the licence.
Commercial agents who are not field agents do not need a licence but, like field agents, they must not be a disqualified person and must comply with the commercial agent rules.
What is a field agent?
NSW Fair Trading has clarified that field agents are “commercial agents who perform their duties on a face-to-face basis.” This can include approaching a person or visiting a person’s home or work when performing their duties. However, phone or video communication does not constitute face-to-face contact.
Who is a disqualified person?
A disqualified person must not carry out commercial agent activity - that is, debt collection, process serving, or repossession of goods.
The Commercial Agents Act and the Commercial Agents Regulations set out who is considered a disqualified person.
A person is disqualified if they are:
an individual under 18 years old;
an undischarged bankrupt to taking advantage of bankruptcy laws;
a company subject to a winding up order;
convicted of a relevant offence where a sentence of imprisonment or a fine of over $500 has been imposed in the past 5 years;
subject to an exclusion order; or
a member of a criminal organisation.
Relevant offences are listed in the Commercial Agent Regulations and include sexual offences, violence offences, harassment, intimidation, weapons and drug offences, and dishonesty.
‘Fit and proper’ persons
A person can only hold a commercial agent licence if they are a fit and proper person.
NSW Fair Trading has indicated that an assessment will take place in order to determine if a person is fit and proper.
A person will not be fit and proper if they:
are a disqualified person;
have been authorised to carry out commercial agent activity under a licence, either in NSW or in another State or Territory, and that licence has been suspended or cancelled within the past 5 years; or
have been convicted of a relevant offence in the past 10 years.
Before granting a commercial agent licence, NSW Fair Trading will also conduct a bankruptcy check, an insolvency check, and a business details check.
Commercial agent rules
All commercial agents, regardless of whether they are field agents, must comply with the commercial agent rules.
According to the rules, commercial agents must:
know and understand relevant laws to carrying out commercial agent activity;
act in accordance with a client’s instructions;
not accept work if to do so would result in a conflict between the agent and a client’s interests;
take reasonable steps to ensure employees employed to carry out commercial agent activities comply with any exclusion orders;
not use or threaten to use physical force or violence;
not enter or threaten to enter a private home without consent of the owner or occupant;
not engage in coercive, intimidating or unconscionable conduct;
not carry out debt collection if the agent knows or reasonably ought to know that the debt cannot be subject of a demand;
not misinform or deceive a person in the course of carrying out commercial agent activity;
maintain duties of confidentiality relating to the subject of the commercial agent activity;
comply with trust account obligations; and
comply with record keeping obligations.
The full list of commercial agent rules is available in the Commercial Agent Regulations.
Penalties
Penalties may be imposed on disqualified persons who carry out commercial agent activity and on unlicenced field agents. Employers without a commercial agent licence that employ field agents can also be subject to penalties.
Transitioning to the new regime
There will be a transition period for persons that held a licence under the CAPI Act. If you held a licence under the CAPI Act, you will be taken to hold a licence under the new regime if you held the licence under the CAPI Act on 30 June 2022, and continue to carry out commercial agent activity as a field agent following 30 June 2022.
This transitional period will end after the expiry of your licence or, if earlier, on 30 June 2023.
Holders of a commercial agent licence under the CAPI Act may be eligible to receive a refund for fees paid for the equivalent to the unused period of that licence.
Patrick Dwyer and Kathleen Harris
Legal Directors
Thanks to Anna Lombardo for her assistance in preparing this article.