The Auctioneers and Valuers Association of Australia (AVAA) said maintaining trust accounts to protect vendors in the event of trading and solvency issues is paramount, and it is has made it a mandatory requirement of being a member of the organisation.
Tim Slattery, AVAA president, said: “While Mossgreen is not a member of AVAA, the uncertainty now surrounding repayments to vendors for items already sold reiterates the importance of maintaining trust accounts for corporate and sole trader auctioneers.”
Mossgreen went into administration in December and its sister firm Mossgreen Webb’s in New Zealand is now in liquidation. Accountancy firm BDO is winding down the companies, which have debts of more than Aus$12m (£7m).
More than 400 creditors exist and it is unclear if money owed will be paid.
Inconsistent state law
Slattery added: “The regulation for auctions is varied across Australian states and territories, with Queensland requiring auctioneers hold a trust account, whereas New South Wales, Victoria and Western Australia don’t require it.
“This is why the AVAA has moved to introduce mandatory requirements for all members.
“While it is disappointing to see a local, well-regarded auction house encounter financial difficulties, not holding sale proceeds in trust has removed basic protection for vendors, who will now rank among other unsecured creditors.”