Broker's Client Accounts

[PaulGooch]

On the YDSA site. It was extensively publicised at the time of the Peters judgement. It is alos well covered in the advice on buying and selling boats from the RYA.

How does Aunty Mary become aware of such things ? She's just decided she want a little boat for the broads and as she has a few grand in the bank, wants to put a deposit down on one. She isn't a hardened boat buyer and we're not talking 300k here.

There are a number of inaccuracies in your post which suggests that you still do not understand the differences between traders and brokers. A trader who takes a deposit against goods to be delivered in the future can indeed use the money if it is paid into his trading account. A broker who pays the money correctly into a client trust account cannot. That is the whole point of this argument. There is a clear distinction in law between the two. Just read the Peters case and you will see how important it is.

I deliberately did NOT mention new builds. I said "selling his own boats".

The failures are clear - they are when buyers become unsecured creditors of companies that go bust - and this is unrelated to client accounts. It could be solved by making client accounts a legal requirement for all businesses taking deposits against the future supply of goods. This however would be a fundamental change to the structure of our trading laws and would make many consumer businesses impossible to run.

When you are dealing with individual transactions involving large sums such as boats there are many methods available to protect your money, as is often discussed here. However these are not costfree so many people choose not to use them and accept the risk of being an unsecured creditor.

We're talking about boat brokerage here, nothing else.

 

[Tranona]

Clients in the BA Peters case were recognised in court as being lied to by BA Peters staff, they were told that their money was been paid into a clients account.

No one at BA Peters has ever been charged of any criminal act following the case and stated facts.

The proven and recognised lies did not help the client to get any money back.


I have tried to sign off from this post, but you keep posting so many misleading statements I cant let it go.

Please stop digging yourself (and worst, good honest Yacht Brokers) into such a deep hole.
I think you would be best to let the professional yacht Brokers association handle this who hopefully have the time to look into this more comprehensively .




I'm once again signing off ......................tag paulgooch

What am I saying that is misleading?

You try to oversimplify things without trying to identify what the real problem is. I could not agree more that this particular case is unsatisfactory - but it is not because of a failure of the client account - as the judge pointed out the funds never went in there. So the problem here as you rightly say is employees lying to the client.

In this case the problem might not have occurred if your proposed law was in force - but only if it made it a legal requirement for ALL deposits and stage payments for ALL transactions had to be through client accounts. As I pointed out in response to Paul, this would make business impossible to operate.

Actually, if you look at that particular transaction in detail it is probably much more complicated. The sale of the clients boat would have been part of an agreement to accept the proceeds as part payment for a new boat. The deposit on the new boat was a new transaction where Peters were acting as a trader. I expect if you could look more deeply you will find that the proceeds of the sale of the old boat were assigned to the new boat, rather than paid out to client.

It would be very difficult to frame a law that would cover all eventualities and cope with all the complex transactions that occur. That particular (part exchange) mechanism for facilitating sales of new boats is common and the potential problems lie in the mixed structure. Putting all the funds (both sale proceeds and deposit) into a client account is one method of keeping the funds secure, as is using a third party escrow. It can also get more complicated if the new boat is being bought under a new build contract where payments are secured against the fabric of the boat, or even covered by a Bank Guarantee, so no one solution is suitable in all circumstances.

Whatever law you have you cannot protect against people lying. One solution is of course to ban all complex deals and impose one single method, but I don't think that would find favour amongst buyers, sellers or intermediaries.

 

[DAKA]

What am I saying that is misleading?

You try to oversimplify things without trying to identify what the real problem is. I could not agree more that this particular case is unsatisfactory - but it is not because of a failure of the client account - as the judge pointed out the funds never went in there. So the problem here as you rightly say is employees lying to the client.

In this case the problem might not have occurred if your proposed law was in force - but only if it made it a legal requirement for ALL deposits and stage payments for ALL transactions had to be through client accounts. As I pointed out in response to Paul, this would make business impossible to operate.

Actually, if you look at that particular transaction in detail it is probably much more complicated. The sale of the clients boat would have been part of an agreement to accept the proceeds as part payment for a new boat. The deposit on the new boat was a new transaction where Peters were acting as a trader. I expect if you could look more deeply you will find that the proceeds of the sale of the old boat were assigned to the new boat, rather than paid out to client.

It would be very difficult to frame a law that would cover all eventualities and cope with all the complex transactions that occur. That particular (part exchange) mechanism for facilitating sales of new boats is common and the potential problems lie in the mixed structure. Putting all the funds (both sale proceeds and deposit) into a client account is one method of keeping the funds secure, as is using a third party escrow. It can also get more complicated if the new boat is being bought under a new build contract where payments are secured against the fabric of the boat, or even covered by a Bank Guarantee, so no one solution is suitable in all circumstances.

Whatever law you have you cannot protect against people lying. One solution is of course to ban all complex deals and impose one single method, but I don't think that would find favour amongst buyers, sellers or intermediaries.

I'm down to skim reading , having got a bit fed up with reading thoroughly and taking time to post comprehensive replies which go unanswered.
Please dont take that as a complaint as I am sure I am equally to blame , it just happens in long threads !

We are wasting time as neither of us have anything to do with the Brokers associations who hold the key.

If you think my suggestion of the yacht brokers associations standing guarantor for their members would offer realistic protection then lets iron out a few details and I will make contact with the relevant associations and see what happens, to be fair after our last ding dong they did amend their wordings and guidance.

perhaps we should wait and see how the poll results come out, it could just be you, mike , paul and still reading this in which case I really dont see much point in doing anything other than agreeing to disagree.

 

[Tranona]

I deliberately did NOT mention new builds. I said "selling his own boats".



We're talking about boat brokerage here, nothing else.

If he is "selling his own boats" then it is not brokerage, he is a trader and different rules apply. Traders do not generally run client accounts as they do not usually hold significant funds on behalf of clients. They may well take deposits to reserve the boat and may hold that deposit for some time before completion to allow time for example for raising finance or a survey. All the time the trader has the deposit it could be lost if he goes bust before completion of the transaction.

As I am sure you know a broker operates differently. He does not own the boat, but acts on behalf of the seller. For practical reasons he holds money on behalf of the seller but never has beneficial ownership of any of it until completion. Use of his client account is the mechanism for ensuring the money is kept separate from his business account.

So, your Aunty Mary should at least find out the capacity of the person she is dealing with, read the contract she is entering into and take the appropriate steps to protect herslf and her money if she is required to hand any over without receiving the goods.

In most transactions it is pretty clear what the options are, but some transactions are complex, and as I tried to explain in reply to Pete, not always possible to have one simple answer.

Hope your Aunty Mary takes good advice and then enjoys boat ownership.

 

[yesod]

daka seems to have jumped tracks from the usual drivel about col regs. quick, someone reboot it

 

[PaulGooch]

If he is "selling his own boats" then it is not brokerage, he is a trader and different rules apply. Traders do not generally run client accounts as they do not usually hold significant funds on behalf of clients. They may well take deposits to reserve the boat and may hold that deposit for some time before completion to allow time for example for raising finance or a survey. All the time the trader has the deposit it could be lost if he goes bust before completion of the transaction.

As I am sure you know a broker operates differently. He does not own the boat, but acts on behalf of the seller. For practical reasons he holds money on behalf of the seller but never has beneficial ownership of any of it until completion. Use of his client account is the mechanism for ensuring the money is kept separate from his business account.

So, your Aunty Mary should at least find out the capacity of the person she is dealing with, read the contract she is entering into and take the appropriate steps to protect herslf and her money if she is required to hand any over without receiving the goods.

In most transactions it is pretty clear what the options are, but some transactions are complex, and as I tried to explain in reply to Pete, not always possible to have one simple answer.

Hope your Aunty Mary takes good advice and then enjoys boat ownership.

Yes, i am aware of the difference between the two. The two quotes you posted were entirely out of context.

Why would Aunty Mary be expected to know the difference between paying a deposit on a stock boat and a deposit on a brokerage boat, and what steps she should take to protect her money ? Please don't tell me that she should be aware, as she is spending such a huge amount. She may only be buying a £25k boat and paying a £5k deposit.

It's clear from reading this and other forums (and indeed my own experiences when buying my first boat), that people are not automatically aware of the differences. They are also not automatically aware of the possible complexities and pitfalls.

A simple requirement to be a member of one of the trade organisations and abide by an agreed code of conduct costs nothing extra to anyone, helps to protect from bad or sloppy practices and would improve the industries image.

I don't see a cat in hells chance that we'll agree on any of this in a trillion years, so i'll leave it at that.

 

[DAKA]

daka seems to have jumped tracks from the usual drivel about col regs. quick, someone reboot it

you are welcome to read my posts and they may help you never to become a brokers mark or you can take the easy option and follow the flock but you might want to check they are not on their way to the slaughter house.

LOW risk but but if you must follow the sheep make sure your eyes are fully open.

 

[jonic]

you are welcome to read my posts and they may help you never to become a brokers mark or you can take the easy option and follow the flock but you might want to check they are not on their way to the slaughter house.

LOW risk but but if you must follow the sheep make sure your eyes are fully open.

Or you could use a good broker with a very good reputation.
(I only do sail though)

 

[DAKA]

Or you could use a good broker with a very good reputation.
(I only do sail though)

Fair comment, like you a member of the ABYA perhaps

I think you should you have taken my previous advice and stop digging.........


BA Peters were of course ABYA members, so I think you have just scored another home goal

 

[jonic]

Fair comment, like you a member of the ABYA perhaps

I think you should you have taken my previous advice and stop digging.........


BA Peters were of course ABYA members, so I think you have just scored another home goal

....except everything we are discussing is Post Peters.

Daka Peters don't exist anymore. They haven't for several years now.

I understand Barclay's bank do though so you are still in with a chance.

Anyhow. You can win. Goodnight.

 

[Tranona]

It's clear from reading this and other forums (and indeed my own experiences when buying my first boat), that people are not automatically aware of the differences. They are also not automatically aware of the possible complexities and pitfalls.

Buy your Aunty Mary a nice late Christmas present - a book on the subject published by the RYA which will inform her (and you) Only £6.50 - less if you are a member.

It really is not that difficult - if she wants to spend £25k on something she currently knows nothing about, it is not unreasonable to expect her, or anybody who is worried about their money, to get some background information on the subject.

I look out over Poole harbour from my bedroom window every morning. There are something like 8000 boats in the harbour. Every one has been bought and sold at least once by individuals. Doubt more than a handful have ever experienced the kind of problems some people on here seem to thing are endemic.

Please keep things in perspective.

 

[PaulGooch]

It's clear from reading this and other forums (and indeed my own experiences when buying my first boat), that people are not automatically aware of the differences. They are also not automatically aware of the possible complexities and pitfalls.

Buy your Aunty Mary a nice late Christmas present - a book on the subject published by the RYA which will inform her (and you) Only £6.50 - less if you are a member.

It really is not that difficult - if she wants to spend £25k on something she currently knows nothing about, it is not unreasonable to expect her, or anybody who is worried about their money, to get some background information on the subject.

I look out over Poole harbour from my bedroom window every morning. There are something like 8000 boats in the harbour. Every one has been bought and sold at least once by individuals. Doubt more than a handful have ever experienced the kind of problems some people on here seem to thing are endemic.

Please keep things in perspective.

That's the usual ****e that i expect you to post.

 

[DAKA]

Please keep things in perspective.

I presume you watch 1000's of boats go out every weekend too and most return.

are the ones that have VHF, Flares, liferafts wimps ?

We are each entitled to our own perceptions of risk.

Look at the poll, there is an overwhelming number of responses who are clearly unhappy at the current risk level (three Brokers distort the figure too !)

Alright you may be happy, I accept that but you shouldnt try to stop us attempting to get the Yacht broker associations to put their house in order any more than you should tell all the boats going to studland that they dont need a life raft !

 

[Laura Nineham]

Let's keep the discussion in hand and avoid little squabbles please

 

[Tranona]

It's clear from reading this and other forums (and indeed my own experiences when buying my first boat), that people are not automatically aware of the differences. They are also not automatically aware of the possible complexities and pitfalls.



That's the usual ****e that i expect you to post.

Well you asked and I gave practical advice. If you don't want advice, don't ask.

 

[PaulGooch]

Well you asked and I gave practical advice. If you don't want advice, don't ask.

I most certainly did not ask you for any advice.

 

[DAKA]

Paul please delete it asap.

You are being deliberately led into your posts in order that YBW will delete the whole thread as some dont like it.

 

[gjgm]

It really is not that difficult - if she wants to spend £25k on something she currently knows nothing about, it is not unreasonable to expect her, or anybody who is worried about their money, to get some background information on the subject.

I dont think that is entirely fair.If there is only one lesson be learned from the last few years' of threads on the topic of buying boats, it is that most of us dont/didnt realise many the POTENTIAL pitfalls. I agree occurrence may be so far and few between that ignorance isnt much of a danger, but I would bet very few boat buyers out there are really aware of the difference between a broker/dealer,exactly the effectiveness of client accounts,can even find a meaningful understanding of VAT risks (or not!), the difference between an agent and a dealer etc etc.
I am still learning details this week and thats having read 1000s of posts on the topic!
Many years ago when the SFA was set up, thr new head said he hoped to avoid sharp operators making fools of the public, but there was little he could do about the public making fools of themselves.
I agree, make some enquiries, but as we have all seen, it can be far from obvious.

 

[Tranona]

How does Aunty Mary become aware of such things ? She's just decided she want a little boat for the broads and as she has a few grand in the bank, wants to put a deposit down on one. She isn't a hardened boat buyer and we're not talking 300k here.

So, what is the point of this passage if you don't want an answer? The first sentence has a question mark at the end which means a question. I provided you with an answer, which you can accept or reject.

However, if you don't want an aswer at all don't bother to ask the question.

 

[DAKA]

So, what is the point of this passage if you don't want an answer? The first sentence has a question mark at the end which means a question. I provided you with an answer, which you can accept or reject.

However, if you don't want an aswer at all don't bother to ask the question.

I didnt really read it as a question, I took it as more a statement, just another example of how some of us feel like 'Broker fodder' , its all our own fault if we stand like sheep awaiting slaughter .


Please note I accept it isnt usually like that but it is how a few posters on the forum make us feel if we ignorantly allow a Yacht Broker to lie/misrepresent to us.