How can You trust a Broker

[aknight]

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George they did have a client account. The problem,according to KPMG was that not all the client money went into it, some was paid into the current account, presumably to reduce their £9 million overdraft. Not much comfort for minor creditors there then

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...and if this month's PBO editorial is correct, some of the money was paid into the client account initially, but then transferred out of the client account into the overdrawn current account.

No disrespect intended to ABYA members who are clearly trying to offer a sense of security to customers via the implementation of their code, but a code is no substitute for the law.

A solicitor who misapplies funds out of a client account is breaking the law and is for the high jump. Even then, every year, there is a small but significant number of a***holes who insist on breaking the relevant solicitors accounting rules, despite the risks. I doubt therefore that a financially desperate ABYA member is going to lose too much sleep over breaking a voluntary code, when his business survival is at stake.

 

[misterg]

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For interest, Peters Opal were/are registered with ABYA.


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That's one step in the right direction.

If they also had third party insurance and a Clients account, then providing customers paid into the Clients account those customer should eventually get their money back in full.

If it does not work this way, I for one would very much like to know why.

If anyone involved with Peters Opal debacle and has monies suspended, feels able to comment here, that would be great.

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Sorry, didn't mean to appear rude - just that I don't see what ABYA brings to the party.

The concept of a 'client account' was debated (to death!) here recently, and without wishing to re-kindle the fire, I believe that the upshot was that there was no special legal status afforded to such an account in general business (maybe there is for solicitors & legal firms, though). Money held in escrow should be 'safe' however.

As an aside, Network Yacht Brokers (who took over some of Deva Marine when they went bust) state that a deposit on a sale (10%) will be held in an escrow account (good), however the 90% appears to be paid direct to them, and isn't passed on to the seller until 28 days after the boat changes hands. If anything happens in this time, the seller is up the creek, and you better hope the buyer has moved the boat off the premises - In Deva Marine's case, the Administrators kept both the money and the boat in a number of cases (no connection, but they were a local company).

Several people have posted here that they lost money (angelawild1 springs to mind, and was featured in an editorial in one of the mags), but I probably isn't fair to expect them to comment, when they're possibly in the middle of legal proceedings.

I don't know what the answer is - You can go some way to protecting yourself as a buyer (pay by cash / BACS & bugger off with the boat as soon as it's paid!), but you seem to be horribly exposed as a seller.

Andy

 

[Richard10002]

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but a code is no substitute for the law.

I doubt therefore that a financially desperate ABYA member is going to lose too much sleep over breaking a voluntary code, when his business survival is at stake.

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In the circumstances you describe, there probably comes a point where they dont lose too much sleep over breaking the law either.

 

[Longshanks]

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I don't know what the answer is - You can go some way to protecting yourself as a buyer (pay by cash / BACS & bugger off with the boat as soon as it's paid!), but you seem to be horribly exposed as a seller.

Andy

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The answer Andy is to buy / sell without a broker! When I bought my boat (after my own due diligence searches and survey) I called my bank, authorised them to confirm to the seller that a) I had money in my account b) they'd just transferred it to him. He signed the bill of sale, handed over the keys and reg.docs. and it was on a truck hours later. Both he and I had no niggling doubts that he'd get his money and I'd get my boat...simple! As someone else mentioned, would you hand the money for your new house to an estate agent to look after...

If we boycott brokers who don't have proper escrow accounts for ALL the monies involved, then the industry will have to change. I've learned a lot from this exchange of messages, and it confirms my earlier fears. I shall for a number of reasons seek to buy my next boat from a private seller if at all possible. Yes things can still go wrong if the homework is not done, but at least you're in control and not at the mercy of a broker that insists on all transactions go through him.

 

[Richard10002]

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If we boycott brokers who don't have proper escrow accounts for ALL the monies involved, then the industry will have to change. I've learned a lot from this exchange of messages, and it confirms my earlier fears. I shall for a number of reasons seek to buy my next boat from a private seller if at all possible.

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The majority of the boat buying market will continue to do things the way they have always been done, so market pressure wont change the industry.

You could expand your choices by looking at boats with brokers, but not paying a deposit, and paying the cash to the seller in the way you describe. The seller may authorise you to settle the brokers fee out of the purchase price.

All the deposit does is take the boat off the market for a while. You would have to be pretty unlucky for another buyer to come along in the time it takes to have a survey and decide to buy.

 

[mormargh]

Personally, I don't see how anyone who is remunerated by means of a commission (as opposed to fee) can act in the best interest of their client, be they yacht brokers, estate agents, insurance brokers or any other such. Why are we always offered extended warranty cover when we buy something for example? Answer - seller gets a commission!

On a serious note, whilst Escrow and Client Accounts are useful, they can't prevent fraud as previous correspondents have noted.