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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