ESTATE AGENCY AFFAIRS BOARD UPDATE ON THE AUCTION ALLIANCE vs. ESTATE AGENCY AFFAIRS BOARD LEGAL MATTER 01 st March

PRESENTATION OUTLINE  To update the Portfolio Committee on the Auction Alliance v. EAAB Constitutional Court matter;  To inform the Committee on the implications of the case to the EAAB;  To highlight some of the significant measures being undertaken to address the Constitutional Court ruling; 2

BACKGROUND INFORMATION (1)  The EAAB obtained a whistleblower report alleging several acts of impropriety and unlawfulness on the part of Auction Alliance Pty. Ltd. After the latter was the subject of a television exposure;  Alleged acts of impropriety and unlawfulness included amongst others, money laundering, ghost bidding, etc.;  EAAB undertook an inspection at the offices of Auction Alliance resulting in the search of its premises which lead to the seizure of certain material and documents;  Auction Alliance challenged the constitutionality of the search and seizure provisions as contained in section 32A of the EAA Act in the Western Cape High Court; 3

BACKGROUND INFORMATION (2)  Section 32A of the EAA Act empowers inspectors to conduct inspections, search and seizures of premises without warrants inspections in order to determine the level of compliance by estate agents with the Act;  Auction Alliance challenged the constitutionality of section 32A on the basis that it goes overboard and infringes on its constitutional right to privacy; 4

CONSTITUTIONAL COURT ORDER  Declaration of invalidity of section 32A of the EAA Act and section 45B of the FICA Act was confirmed;  ConCourt ordered that the declaration is not retrospective but prospective;  Declaration of invalidity was suspended for 24 months starting from March 2014 to February 2016, to allow the legislature an opportunity to cure the invalidity;  ConCourt read into section 32A of the EAA Act and section 45B of the FICA Act requirements necessary to conduct inspections in the interim; 5

IMPLICATIONS OF THE CONSTITUTIONAL COURT ORDER (1)  ConCourt postponed the invalidity of section 32A of the EAA Act;  The suspension of invalidity of section 32A comes to an end this February 2016;  There is not yet any legislative amendment to cure the invalidity of section 32A in the form of the property Practitioners legislation;  Implications are that the EAAB will have no powers to conduct inspections beyond February 2016; 6

IMPLICATIONS FOR THE CONSTITUTIONAL COURT ORDER CONT.. (2)  First option available to the EAAB was to apply to the ConCourt to have the invalidity of section 32A extended;  Second option was to have the invalidity expires and put in place contingency measures to mitigate the likely consequences;  Taking the first option could not solve the problem as the Property Practitioners Bill is still to be introduced to Parliament during the course of the 2016 session;  We have learned from past judgments that the ConCourt would be amenable to grant at least six months;  The second option seems to be the most viable under the circumstances; 7

CONTINGENCY PLANS AND MEASURES  A Compliance Monitoring and Assessment Framework has been developed to ensure that the EAAB continues to monitor compliance with the Act;  The Compliance Monitoring and Assessment Framework deals with a number of strategies and measures to be implemented to determine the level of compliance;  The EAAB will regularly monitor the efficacy of the strategies and measures; 8

CONTENTS OF THE COMPLIANCE MONITORING AND ASSESSMENT FRAMEWORK  Strengthening and capacitating our existing audit compliance processes to ensure compliance with the Act;  Conducting desktop audits to promote compliance;  Introducing sself-assessment tools to promote compliance;  Strengthening and capacitating our enforcement capabilities to enforce compliance to the Act; 9

CONDUCTING OF DESKTOP AUDITS  One of the key features of the Compliance Monitoring and Assessment Framework is the performance of desktop audits;  Estate agents and agencies will be required to submit information and records electronically;  Information and records submitted will be analysed to determine their level of compliance;  In the event of any irregularities, charge sheets will be generated and send to those estate agents and agencies requiring of them to comply; 10

AUDIT COMPLIANCE PROCESSES  The existing audit compliance and monitoring processes will be enhanced;  Court enforcement mechanisms will be enhanced to ensure that charge sheets generated from the audit compliance process are follow-up; 11

STRENGTHENING THE ENFORCEMENT MECHANISMS  The inspectorate powers is but one of the compliance mechanisms that the Act provides;  Without the inspectorate powers, the EAAB will still be able to enforce compliance with the Act applying the enforcement mechanisms contained in the Act;  The EAAB has various ways in which complaints can be lodged against estate agents and agencies;  In this regard, our existing enforcement mechanisms will be enhanced to ensure that complaints lodged are followed-up and prosecuted; 12

SELF-ASSESSMENT TOOLS  As its name suggests, the self-assessment mechanism is aimed at promoting self-assessment and self- evaluation by estate agents and agencies themselves applying our self-assessment tools to be provided online;  On a regular basis, the EAAB will assess and evaluate questionnaires completed and received;  It is believed that the self-assessment tools will encourage self-evaluation and monitoring amongst estate agents and agencies; 13

COMMUNICATION  The EAAB is developing a multi-stakeholder communication plan to raise awareness on the plans already indicated;  The communication plan be consulted and agreed with the Multi-Stakeholder Group which includes the Department, Provinces and Municipalities;  The EAAB will utilise a range of communication methods to raise awareness on the contents of the communication plan; 14

IMPLEMENTATION OF THE MEASURES AND PLANS  The Compliance Monitoring and Assessment Framework has been finalised;  The framework will be rolled-out during the second quarter of 2016;  Regular and quarterly evaluations and assessment will be conducted on the effective implementation of the framework; 15

THANK YOU 16