diligaf
Well-Known Member
But we don't want to pay anymore commission......................................
Yacht Brokers / Dealers and safeguarding clients money- Time for legislation
- Thread starter DAKA
- Start date
But we don't want to pay anymore commission......................................
D
Deleted User YDKXO
Guest
Speak for yourself. I'd happily pay a few quid more in broker's commission for the security of a watertight compensation scheme. If there are sellers who don't want to do that then maybe brokers could offer a compensation scheme for an extra premium to sellers on an individual basis? In any case, commission is a very poor way to choose a broker to sell your boat. The first consideration is whether the broker is a sound company with a good track record and is unlikely to defraud you. The second consideration is whether he is likely to sell the boat and the third consideration is at what price. A solid broker who sells your boat relatively quickly for a good price and charges 6% commission is a lot better than a backstreet broker who takes forever to sell your boat at a giveaway price and charges 4% commission
diligaf
Well-Known Member
I know that. I agree that you need to pay a decent amount to a decent broker.
I was merely trying to say that most people on here seem to want to pay bugger all commission but have all the safeguards.
I was merely trying to say that most people on here seem to want to pay bugger all commission but have all the safeguards.
D
Deleted User YDKXO
Guest
Sorry, I misunderstood your post!
gjgm
Well-Known Member
I thought the broker went to jail, not legged it to the sun ?
So, we have a story of one crook over ,say,5000 boat sales over several years.
I am sure compared to all the fraud and theft that happens up and down the country every day, this isnt so severe we need legislation. I might hope the right honourables have something more pressing to deal with, like their end of year expense claims
Seriously, just look up how complex it is to pass a law.
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ari
Well-Known Member
So your new scheme is enshrined in law. And this dodgy broker still flogs the boat to a (presumably) unsuspecting punter in Spain. Result:
Yacht Broker uses his position of trust to get hold of his marks cash
yacht Broker spends his marks cash
The mark doesn't receive a penny compensation
Explain to me again what your new scheme has solved?
You can't legislate people doing naughty things away. You can punish them when they do, and you can hope that creates a deterrent. But that's all.
And that is exactly what happened here. He's in jail!
gjgm
Well-Known Member
Fair enough... BA Peters wasnt in the last three years, surely, and was something entirely different, but we are not going to agree on the severity of the issue anyway. You seem to imagine some super bendy law that is going to cover every misdeed, Daka. It isnt going to happen. If you can convince YBDA or whatever it is, to form a collective insurance scheme, then well done. So far, who knows why not..they dont see the need, the members dont see the need, there are other means...no one wants to pay...I dont know, but every time someone gets scammed and it is nautical you think there is a miracle solution. There isnt. Crooks will still find a way round it if they want to. And then what will happen... well, they probably get caught, and go to jail.
What you want is someone else to carry the can for your risks. I cant see any Association being prepared to take on that risk- why should they, it isnt their risk-so they will need someone to [provide them with insurance. That insurance will then simply have to have very specific description of cover...one step outside those terms and someone is back in the poopsy crapsy.
Maybe you can get an insurance co to give complete and total cover against any financial misdeed by any member (which given the range of examples you give above is what is needed), but who would then want to pay the premium?
P4Paul
Well-Known Member
I fear I may be missing your point so can I ask for clarification?
The instance you quote in your first post was of a lady who lost her boat because a broker under financial pressure decided to forge signatures of both the seller and a witness, sell a boat that wasn't his and keep the money. The broker was charged by the CPS and given a custodial sentence for fraud. Whatever happens next, one thing is sure - someone will lose out, either the lady will lose her boat or the purchaser will lose their money as a direct result of fraud.
In the Peters Opal case, no one was charged with fraud although some people lost money and/or boats. The main issue with the Peters Opal case was the fact that once the money had been harvested from the Client account on Friday evenings it lost its protection even though it was returned on Monday mornings. In the last couple of months where money had been paid into the client account and not harvested, the court directed the administrators to repay the money to the clients as it had maintained its protection.
I think if I read your post right you are suggesting that a Brokerage Association would be able to provide assurance in the event of both very different situations above and the multitude of cases in between.
I am struggling to see how, especially when there isn't one single association to start with, from memory there are the
ABYA, the YBDSA, the MYBA, the BRBA and what would happen if the boat, buyer, seller or broker is based in another country?
Maybe I am missing your point but when I am spending my money on large ticket items, I make sure I have it well protected and not rely on an association to look after it for me.
Maybe the answer is for one of the insurance companies to offer a seller insurance covering all of the above risks - hang on, haven't we just spent months talking about insurance companies and their approach to payment........
P4Paul
Well-Known Member
So in the instance of the fraud you originally quoted, how would it work in reality? Would the association pay out the full asking price to the seller or reimburse the purchaser?
P4Paul
Well-Known Member
But this is where I am confused, continuing to trade insolently is illegal so what protection will an association offer that UK law doesn't? What would the associations accountants see or do differently that the brokerage company accountants wouldn't?
In the case of the lady in your first post, she didn't sell her boat to anyone, a broker forged her signature and that of a witness and disposed of the boat without her knowledge. This case could just as easily happen because of a rogue broker with domestic money problems rather than an insolvent brokerage, would the association pay out in the event of fraud being carried out by an employee?
P4Paul
Well-Known Member
But that was exactly the case you quoted in your first post when you put up the poll about compulsory registration of yacht brokers.
Now I am really confused......
P4Paul
Well-Known Member
Any possible future commission surely cannot be on the balance sheet unless contracted and subject to goods sold, not invoiced.
If any possible future commissions can be added to the balance sheet then that paves the way to any organisation just adding up the value of all it's quotes and calling itself solvent.
I admit I am not an accountant however my MBA was in Business and Finance. Happy to be corrected though.
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P4Paul
Well-Known Member
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ari
Well-Known Member
Daka, what you're suggesting is a bit like gun laws. Make sure everyone with a gun has to have a licence. Do background checks on them before they can get a licence. Make sure they keep their gun in a locked cabinet. Introduce stringent rules on the transportation of guns and even more stringent rules on the firing of guns. Have a central licencing bureau. Ensure felons cannot get gun licences.
Bingo, problem solved - no more gun crime ever!
Guess what?
Bingo, problem solved - no more gun crime ever!
Guess what?
jimmy_the_builder
Well-Known Member
Problem is, if all brokers need to be registered with some kind of central mandatory authority then what next? All boats need to be registered? All skippers need to be registered?
No thanks. There isn't a problem to be solved, people just need to exercise a bit of due diligence before transacting.
Move along, nothing to see here.
No thanks. There isn't a problem to be solved, people just need to exercise a bit of due diligence before transacting.
Move along, nothing to see here.
Resolution
Well-Known Member
Regulate posts on this forum?
ontheplane
Well-Known Member
But I kind of agree with DAKA.
I am going to use total guesstimates here BUT.
If 5000 boats are sold every year by brokers - and 1% go bust, then surely the scheme would be workable - a small fee paid to a central insurance pot, and a separate client account.
Before the broker joins the scheme they have to submit accounts and the last 3 bank statements....
If I were buying a boat through a broker I'd then insist they were a member, as I'd feel there could be no realistic reason not to be.
The whole thing could be administered by the RYA and not for that much money - it could be a fairly simple scheme to run....
I think that whilst people casually say there is no need to change anything - just look at the results of this poll - clearly some people do....
I am going to use total guesstimates here BUT.
If 5000 boats are sold every year by brokers - and 1% go bust, then surely the scheme would be workable - a small fee paid to a central insurance pot, and a separate client account.
Before the broker joins the scheme they have to submit accounts and the last 3 bank statements....
If I were buying a boat through a broker I'd then insist they were a member, as I'd feel there could be no realistic reason not to be.
The whole thing could be administered by the RYA and not for that much money - it could be a fairly simple scheme to run....
I think that whilst people casually say there is no need to change anything - just look at the results of this poll - clearly some people do....
Resolution
Well-Known Member
On the plane
Trouble with all these industry insurance schemes is that the good guys end up paying for the bad guys. If you were running a decently based broker and operating a client account system honestly and effectively ( as many do), why would you want to contribute to a scheme that would enable less good brokers to do business?
The numbers involved in an insurance scheme are worth thinking about. Assuming your figure of 5,000 boats sold each year through brokers, what insurance premium might be required?
Let's assume 100 participating brokers, each selling 50 boats a year, valued on average £100,000.
You suggested 1% would go bust (default) each year.
Let's assume in the process 10% of their annual transactions default, ie about one months throughput. That's 5 boats and £500,000 total default loss.
To fund this, before any costs of administrating the scheme, a premium of £100 will need to be added to every broked transaction. On a £100,000 transaction I would have thought that would not be unbearable, but then I,m not the one paying it!
Any better guesses at the figures?
Trouble with all these industry insurance schemes is that the good guys end up paying for the bad guys. If you were running a decently based broker and operating a client account system honestly and effectively ( as many do), why would you want to contribute to a scheme that would enable less good brokers to do business?
The numbers involved in an insurance scheme are worth thinking about. Assuming your figure of 5,000 boats sold each year through brokers, what insurance premium might be required?
Let's assume 100 participating brokers, each selling 50 boats a year, valued on average £100,000.
You suggested 1% would go bust (default) each year.
Let's assume in the process 10% of their annual transactions default, ie about one months throughput. That's 5 boats and £500,000 total default loss.
To fund this, before any costs of administrating the scheme, a premium of £100 will need to be added to every broked transaction. On a £100,000 transaction I would have thought that would not be unbearable, but then I,m not the one paying it!
Any better guesses at the figures?
grumpy_o_g
Well-Known Member
It really doesn't matter if it's never happened before or if it happens with 50% of transactions. There's a risk, which there is with any transaction - but this is one that seems to be easily mitigated for a comparatively small cost, especially for larger transactions. jfm has already given you one perfectly good solution - put the boat in trust. Alternatively you could draw up a tripartite agreement but that would be far messier and, in practice, one party would have precedence.
For smaller values either buy/sell privately or maybe have a contract that makes the purchaser liable for specific fees to specific parties, such as yard storage and brokerage fees, with the balance payable to the seller. Effectively you're transferring specific liabilities with the title of the yacht I guess. The contract could clarify that all other liabilities remain with the seller but I suspect that marine law would mandate that, in some circumstances, the liability would stay with the yacht whatever the contract said.
Yes, there is a cost associated with either method but mitigating risks costs money. The cost of setting up a trust and subsequent transfers could be significantly reduced if this was pre-defined and common procedure. The marine finance companies should be able to offer the service and bundle the cost into the finance or simply charge for the service if the finance is not used, or one of the marine solicitors could offer the service.
For the smaller value transactions the only cost would be the drawing up of the contract. As this would again be based on a boilerplate document (just as the current RYA agreement is) - the only significant work would be ensuring any outstanding liabilities were correctly listed and called out as appropriate. I am most definitely not a lawyer but this is a mechanism I've seen used many times in commercial contracts.
For smaller values either buy/sell privately or maybe have a contract that makes the purchaser liable for specific fees to specific parties, such as yard storage and brokerage fees, with the balance payable to the seller. Effectively you're transferring specific liabilities with the title of the yacht I guess. The contract could clarify that all other liabilities remain with the seller but I suspect that marine law would mandate that, in some circumstances, the liability would stay with the yacht whatever the contract said.
Yes, there is a cost associated with either method but mitigating risks costs money. The cost of setting up a trust and subsequent transfers could be significantly reduced if this was pre-defined and common procedure. The marine finance companies should be able to offer the service and bundle the cost into the finance or simply charge for the service if the finance is not used, or one of the marine solicitors could offer the service.
For the smaller value transactions the only cost would be the drawing up of the contract. As this would again be based on a boilerplate document (just as the current RYA agreement is) - the only significant work would be ensuring any outstanding liabilities were correctly listed and called out as appropriate. I am most definitely not a lawyer but this is a mechanism I've seen used many times in commercial contracts.
Nigelpickin
Well-Known Member
Bonded client accounts would be the way to go, it works in plenty of sectors from construction to tourism...
A healthy company should be able to attain a bond for > 5% of the percieved risk; so as a usp for a broker it would be affordable.
But how many brokerages would have audited accounts that would meet the requirements of the bond obligor?
What would not be possible is an industry group insurance scheme with a premium based on the turnover of the brokerage, sounds like a great idea but would be unworkable from the underwriters point of view.
Not sure if there would be an appetite from within the industry to increase the cost base but I know from personal experience that offering complete security to my clients has had a huge affect, especially in the current ecconomic climate!