The Australian Competition and Consumer Commission says water brokers and other intermediaries dealing with Murray-Darling Basin water rights on behalf of clients should be complying with the new code.
Application of the code has been phased. Some obligations came into effect on July 1, with the remaining obligations applied on October 1.
Intermediaries must tell their current or proposed clients about any conflict of interest.
The ACCC says a conflicting interest may include the intermediary or its related party receiving, or expecting to receive, a benefit from a person who is not the client or proposed client. This could be a commission, fee or any other type of benefit.
“For example, a conflict would arise where an intermediary acts for both a buyer and a seller to the same trade and receives a fee from each party to facilitate the transaction,” the ACCC said.
Intermediaries must hold professional indemnity insurance to cover the services they provide and the specified insurance requirements in the code.
The insurance policy must provide at least $5 million for any one claim, and $10 million in total for the year.
The ACCC says an intermediary must always deal in good faith when providing services to current and proposed clients. If they don’t, they may face civil penalties.
Other obligations in effect from October 1 include:
- providing information to clients about services and obligations;
- obtaining written authorities to submit trades and act as an agent;
- maintaining broking water accounts;
- maintaining client ledgers for broking water accounts and trust accounts;
- dealing with complaints; and
- keeping certain records for six years.
Complementary trust accounting requirements that started on July 1, including for the handling of client monies, are set out in the Water Act 2007
The ACCC is responsible for enforcing the code and the trust accounting requirements. Civil penalties may apply for non-compliance.
Intermediaries have been told to review the new laws to make sure they are compliant.
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