Friday - 31 October 2014

Bonhams renew campaign over client accounts

05 March 2012Written by Ivan Macquisten

BONHAMS have renewed their call for better client protection in the wake of Auction Atrium’s demise, with the online auction house still owing six-figure sums to consignors.

Matthew Girling, chief executive of Bonhams, has issued a national media statement calling on the auction industry to follow Bonhams' lead "and take concerted action to protect proceeds owing to clients".

He has also written to Christie's director Richard Roundell, chairman of the art and antiques faculty board at the RICS, saying: "RICS should lead the way on this and demand that our clients, the vendors, are better protected."

Mr Girling, who warns that "if we do not act tighter regulation may be forced upon us by events such as these", questioned Auction Atrium's continuing membership of the Society of Fine Art Auctioneers (SOFAA) after the auction house disposed of its separate client account policy.

And in his letter to Mr Roundell, he further challenged Christie's and Sotheby's, who, unlike Bonhams, do not operate separate client accounts, with the words: "The world has seen great institutions such as Lehmans go under in recent years. No business is immune."

SOFAA chairman Paul Viney agreed that client protection was vital, saying that his own firm, Salisbury-based Woolley & Wallis, had operated separate client accounts "since the year dot".

He added: "When Auction Atrium applied to join SOFAA I went along personally and met them, and they said that they had a separate client account, which they did at the time. Later, it transpired that their investor changed the arrangements."

He confirmed that SOFAA had not been informed of the changes and that had Auction Atrium not held client accounts separately when they had undergone SOFAA's inspection, "they may well have not been admitted".

Mr Viney also pointed out that while SOFAA was an advisory body rather than a regulatory organisation, it strongly advised members to operate client accounts - about 90% do - or make alternative suitable arrangements. "We insist on professional indemnity insurance as part of best practice," he explained.

The Auction Atrium case, where separate client accounts had been introduced, then scrapped, was "exceptional", he told ATG.

Meanwhile, a Christie's spokesperson said: "Our clients are safeguarded by the 246-year tradition of our company which has established us as a trusted broker of their art assets over many generations."

And Sotheby's said: "As the only publicly listed international auction house, Sotheby's discloses on a quarterly basis, as required by the US Securities and Exchange Commission, significantly more financial information about all aspects of its business than any other auction house. In addition, independent auditing by Deloitte, a leading global audit firm, provides clients a level of transparency and assurance which is unique in the international auction business.

"As a matter of law Sotheby's is not required in any of its major venues to maintain separate client accounts and as a global listed company, we have the resources and procedures to ensure that there is no risk to client monies."

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Written by

Ivan Macquisten

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