STATUE
Well-Known Member
Don't trust the so called CLIENT ACCOUNT of a yacht broker, I have approached a firm of solicitors who do not offer ESCROW services.
What do Ido ?
What do Ido ?
Selling using ESCROW Account ?
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pvb
Well-Known Member
Maybe try someone like this - http://www.escrowcustodianservices.co.uk/boat-escrows/
Pinnacle
Well-Known Member
Do you trust your lawyers client account?
Tranona
Well-Known Member
Why do you not trust a brokers client account? If he is a member of YDSA or BMF it will be totally secure and just as secure (or some might argue even more secure) than a solicitor's client account.
Make sure any deposits into the account go into a named client account and you get a deposit receipt from the bank.
If you are buying through a broker this is part of his service and therefore of no cost to you.
Genoa
Well-Known Member
What do the great and good think of buying through a Spanish Broker? What due diligence should be done?
pvb
Well-Known Member
That rather suggests that the YDSA or BMF will compensate a seller's losses if a broker defrauds then. They won't.
It's also worth remembering the Peters-Opal debacle, in which many people lost thousands of pounds, and which happened when Brian Peters was President of the BMF....
Tranona
Well-Known Member
No I did not suggest that.
The reason for stating that is because the account type used by the broker is specifically designed to avoid the problem highlighted by the Peters case.
In this context (of relationship with trade associations) the connection is irrelevant. There was nothing wrong with the account, nor of the way it was operated in respect of brokerage business. The problem was related to a complex set of transactions involving new boats. There was no intention to defraud, nor was Peters directly involved. It is important that the real lessons are learned, not imaginary ones.
It pays to read the summary of the case to understand the issue at stake (which was about what creates a trust under trust law) and which will not arise if the procedure I outlined (standard practice now) is followed.
pvb
Well-Known Member
Wasn't it the case that monies were missing from the Peters-Opal client account? Wasn't it found that banks could sieze money from a company's client account if it went into administration? "Boating Business" did an interesting article about the Peters-Opal collapse, including this comment:
"Then what about client accounts? True, these should mean that clients' money is kept safely away from the hungry maws of a busy factory or a financially challenged dealer - or both. But even if clients' account money can't be used to fund daily cash flow requirements, it can be described as an asset by a company seeking extra overdraft or loan facilities from its bank.
But it appears that when a company does call in the administrators, the creditor bank can freeze such clients' accounts. As Peters says happened here.
The implication of this would seem to be that, should the bank end up out of pocket, it could take a dip into the clients' account. Depending on whom you believe, the Peters Plc clients' account holds around £650k. Which is a lot of OPM (other people's money)."
http://www.boatingbusiness.com/news101/comment/peters_plc_-_the_lessons
Tranona
Well-Known Member
The money that was lost was never in the client account but was paid into a general account which was overdrawn. When Opal tried to transfer into the client account the bank refused. So that quote is misleading.
The case centres on the creation of a Trust and to do that you have to show that each individual's money is separate in the account for a specific purpose. The bank cannot touch a properly set up client account because the funds do not belong to the company but to the client (hence the name).
The case was not about fraud or mismanagement but about who owned the funds in the account. Buyers of new boats who believed their funds were in the account were trying to get a share of the total amount in it.
The ruling was that only those who could show their funds were directly deposited in the account had any claim under Trust law. Inevitably this was all the brokerage clients who had been dealt with properly, but excluded the new buyers who had not. The fact that it went to the high court suggests that prior to that there was no agreement amongst lawyers on this point. However it is now well accepted and all client accounts (at least for reputable brokers) are bullet proof and clients funds are secure.
It is all too easy to say that Opal shows at best that there are risks or at worst all brokers are crooks, or the law is inadequate, but it does not do this, nor is it true.
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pvb
Well-Known Member
The problem is, there's no way of knowing until a broker decides to fiddle. If that happens, the YDSA and BMF will do nothing except cancel the membership.
Tranona
Well-Known Member
Such a broker would not be a member.
It is easy to check that the account is correct and that your money is safe. When did you ever hear of a broker stealing from a client account? Not that there are not crooks around but there are much easier ways of defrauding clients than trying to steal from such an account.
On the other hand there are regular and frequent cases of solicitors stealing from clients. Once you understand how brokers work you will understand why it is not a "sensible" crime and also then understand why so many solicitors do think it is worth taking the risk.
pvb
Well-Known Member
Peters-Opal were members, and their boss was President of the BMF.
Tranona
Well-Known Member
How many more times do I have to say that it was not a fraud case. The legal point was about what creates a Trust. It is clear that there was bad management of finances at Opal, mainly due to procedures but to use this as an example 10 years on about the reliability and security of Client trust accounts when the funds in question were never in a client account is just wrong.
pvb
Well-Known Member
Ah, not fraud, the money simply got into the wrong accounts because of bad management. I don't suppose you have ever had any connection with the BMF, have you? You seem to be very keen to defend the organisation.
STATUE
Well-Known Member
See, the more words I see about defending the crooked, the more wary I become.
Oh Dear !
STATUE
Well-Known Member
Thanks a PVB , but again we have to think. "Who are these people?"
jwilson
Well-Known Member
Really !!!!! A limited company that does not quote their Company No. or registered address on their website as they are required to do by law......
Tranona
Well-Known Member
Nobody is defending anybody, least of all me.
Just stating the FACTS for those too lazy to read it up for themselves.
Suggest you talk to John Rodriguez who posts here as jonic and is president of the YDSA if you have any concerns about security of client accounts. Then you will get the facts from another source.
Just to add to the Peters case. This was a landmark case, not just for yacht brokers but for any of the many different types of business that use client accounts. It was a unique set of circumstances which revolved around a principle of Trust law that had never been tested in the courts. The judgement clarified the law and as a result the form of client accounts now used was set up to reflect that judgement and results in security for clients funds which can now not be used for the firm's business, nor taken by the bank. The former has always been fraud, but is now much more difficult and the latter was possible in earlier types of account. Important though to understand that neither of these things happened in Peters.
If stating the facts, which are all in the public domain is "defending the crooked" than I am guilty. Nobody was convicted of any crime, nor was the case about any criminal act. It was solely about who had a claim on the funds in the client account.
Sorry about the number of words but if you want an explanation of what was a very complex situation then you need lots of words.
pvb
Well-Known Member
If anyone is interested in seeing the real fall-out of the Peters-Opal fiasco, the judge's findings are online here - https://www.casemine.com/judgement/uk/5a8ff75860d03e7f57eab8b8
The financial manoeuvring, shifting of bank monies, non-completion of essential contract paperwork, and other serious errors are terrifying. And this was from a major player in the European marine industry, headed up by the President of the BMF!
As I've said earlier, if a broker runs away with your money, membership of the YDSA and BMF (which Tranona has said will make your money secure) will in fact do absolutely nothing. All the YDSA and BMF will do is to cancel the broker's membership, which doesn't get your money back.
After the Peters-Opal fiasco, there was an opportunity for the BMF to restore consumers' faith in the industry by adopting a scheme similar to the ATOL scheme for flights. By choosing not to, they failed miserably.
Back in 2014, years after the Peters-Opal scandal, marine trade associations in the UK lobbied successfully against plans to make brokers register with the government’s Financial Conduct Authority (FCA) before they could set up accounts for clients with banks. Why do you think they did this?
I speak as someone who's experienced the dishonesty of the marine industry. Indeed, I'm lucky to own my boat. I'd paid the Bavaria dealer I bought my boat from a 6-figure sum before the boat was even released from the factory, not realising the perilous financial position of the dealership. I got the boat, but there were lots of subsequent commissioning and other faults which the dealer failed to sort out, and which I paid for. In the end, I took out a Small Claims action against the dealer, who promptly ceased trading. But in fact they didn't; they're still operating, same people, same premises, just without the "Ltd" at the end of their name. Would I buy another new boat? Yes, but only with bank guarantees. Would I buy a used boat from a broker? Yes, but only with bank guarantees.
The financial manoeuvring, shifting of bank monies, non-completion of essential contract paperwork, and other serious errors are terrifying. And this was from a major player in the European marine industry, headed up by the President of the BMF!
As I've said earlier, if a broker runs away with your money, membership of the YDSA and BMF (which Tranona has said will make your money secure) will in fact do absolutely nothing. All the YDSA and BMF will do is to cancel the broker's membership, which doesn't get your money back.
After the Peters-Opal fiasco, there was an opportunity for the BMF to restore consumers' faith in the industry by adopting a scheme similar to the ATOL scheme for flights. By choosing not to, they failed miserably.
Back in 2014, years after the Peters-Opal scandal, marine trade associations in the UK lobbied successfully against plans to make brokers register with the government’s Financial Conduct Authority (FCA) before they could set up accounts for clients with banks. Why do you think they did this?
I speak as someone who's experienced the dishonesty of the marine industry. Indeed, I'm lucky to own my boat. I'd paid the Bavaria dealer I bought my boat from a 6-figure sum before the boat was even released from the factory, not realising the perilous financial position of the dealership. I got the boat, but there were lots of subsequent commissioning and other faults which the dealer failed to sort out, and which I paid for. In the end, I took out a Small Claims action against the dealer, who promptly ceased trading. But in fact they didn't; they're still operating, same people, same premises, just without the "Ltd" at the end of their name. Would I buy another new boat? Yes, but only with bank guarantees. Would I buy a used boat from a broker? Yes, but only with bank guarantees.
STATUE
Well-Known Member
PVB, excellent guidance, no doubt 'hard gained'.
Now to really show my ignorance : What is a Bank Guarantee ?
Happy if you just gave a reference to which I can study.
Looks like you have the answer yo my original question.
Many Thanks.
