A recent NSW Fair Trading prosecution has highlighted the significant risks agencies face when trust account controls, supervision and internal processes fail. 

A former NSW property manager has been sentenced after fraudulently obtaining more than $180,000 from rental trust accounts and rental bonds over a two-year period.  According to NSW Fair Trading, the misconduct involved more than 160 fraudulent transactions and remained undetected between March 2022 and July 2024. 

While the case is extreme, it raises an important question for every real estate business:  Could your agency detect a similar issue before it became a major problem? 

The Case 

NSW Fair Trading recently announced that a former property manager at a regional NSW agency had been convicted after fraudulently transferring funds from the agency’s rental trust account into personal bank accounts under her control. 

The funds were reportedly concealed amongst legitimate landlord payments, allowing the conduct to continue over an extended period. 

The agency ultimately compensated affected clients and has since entered into Enforceable Undertakings with NSW Fair Trading, including commitments to strengthen auditing processes, undertake additional staff training and contribute to the NSW Consumer Law Fund. 

The former property manager no longer holds a real estate licence. 

The Bigger Issue Isn’t the Fraud 

Most agencies reading this article will never experience fraud on this scale. However, focusing solely on the individual misconduct risks missing the broader lesson. This case is really about systems. 

When Fair Trading investigates trust account issues, the focus is rarely limited to the actions of one employee. Regulators also want to understand: 

• What controls were in place? 

• How were trust accounts monitored? 

• Were reconciliations being completed? 

• What auditing processes existed? 

• How was supervision being exercised? 

• Were warning signs identified and acted upon? 

In other words, agencies need systems that don’t rely on trust alone. 

Why Trust Accounting Requires Strong Oversight 

Trust accounts sit at the heart of real estate practice. Property managers and agencies handle large amounts of money on behalf of landlords, tenants and clients every day. That responsibility comes with significant legal and professional obligations. 

The vast majority of industry professionals do the right thing. However, this case demonstrates why regular oversight remains critical. Even experienced and trusted employees should operate within clear processes that include: 

• Segregation of duties where possible 

• Regular trust account reconciliations 

• Internal audits and reviews 

• Management oversight 

• Clear reporting procedures 

• Ongoing compliance training 

Strong controls protect clients, but they also protect agencies and staff. 

The Role of Supervision 

This case also highlights the growing importance of supervision within modern real estate businesses. Across NSW, regulators are placing increasing emphasis on how agencies supervise staff, manage risk and demonstrate compliance. 

For Licensees in Charge, the expectation is no longer simply that systems exist. Agencies need to show those systems are active, documented and consistently followed.  

As agencies grow, this becomes even more important. What may have worked when managing a small team often becomes insufficient when multiple property managers, administrators and trust account functions are involved. 

Training Is Part of the Solution 

One of the outcomes of this case was additional staff training requirements. That shouldn’t be overlooked. While training alone cannot prevent misconduct, it plays an important role in helping staff understand: 

• Trust account obligations 

• Compliance requirements 

• Reporting responsibilities 

• Risk indicators 

• Internal procedures 

Importantly, training helps create a culture where compliance is seen as part of daily operations rather than an annual exercise. 

What Agencies Should Be Reviewing Right Now 

This case provides a timely opportunity for agencies to review their own processes. Some useful questions to consider include: 

• Who has access to trust account funds? 

• What checks and balances currently exist? 

• How often are reconciliations reviewed? 

• Are trust account procedures documented? 

• Could unusual transactions be identified quickly? 

• Are staff receiving regular compliance training? 

• Is supervision appropriate for the size and complexity of the business? 

For many agencies, the answers may be reassuring. For others, there may be opportunities to strengthen controls before issues arise. 

 The Takeaway 

The NSW Fair Trading prosecution serves as a reminder that compliance isn’t simply about avoiding penalties. It’s about protecting clients, protecting staff and protecting the reputation of the business. 

Most agencies will never face a fraud case of this magnitude. But every agency benefits from strong systems, effective supervision and ongoing staff education. Because when it comes to trust accounts, prevention will always be better than remediation. 

How Under The Hammer Can Help 

At Under The Hammer, we work with agencies across NSW to strengthen compliance, improve supervision practices and build practical systems that support day-to-day operations. 

Through our training, compliance support and professional development programs, we help agencies turn regulatory obligations into clear, workable processes that support both compliance and business performance. 

Because good compliance isn’t just about avoiding risk. It’s about building a stronger, more professional real estate business. 

Disclaimer  

This article is general industry commentary only and does not constitute financial, taxation or legal advice. Agents should encourage clients to seek independent professional advice regarding their individual circumstances.