Both BMF and RYA code of conduct states that brokers must hold customers payments in a 'customer account' which cannot be used for business expenses - however, as is not uncommon on the Inland wateways, this is not enforced, as seen by the case in Nottingham where the broker took several deposits on the same boat, even 'selling' a boat he had in for repair (not for sale) and spent all of the money keeping his business "afloat". He went bankrupt and it all came out but both sellers and buyers were done out if many £10,000s.
BMF code of practice re customers monies
Handling Customer Monies (Brokerage)
Boat brokers must protect customer monies by using:
A solicitor’s trust account (escrow account) whereby
1.1 A solicitor holds the money until the transaction is completed. This will require an agreement between the parties and the account will require all party signatures for funds to be released.
1.2 Confirmation of use of this method will be required by BMF from the member’s solicitor that such an arrangement is in existence initially and then at any such intervals as the BMF may decide. Members are also required to sign a declaration that such an account is being used to hold brokerage monies. Members will then be required to declare that such arrangements continue to be in place and that such an account is used to keep brokerage monies on an annual basis via the BMF turnover declaration form.
OR;A separate client bank account whereby:
2.1 The member will set up a bank account exclusively for holding customer monies, preferably with a separate bank to that which holds the business’s other accounts.
2.2 Confirmation will be required from the member’s bank that such an account is in existence initially and then at any such intervals as the BMF may decide. Members are also required to sign a declaration that such an account is being used to hold brokerage monies. Members will then be required to declare that such arrangements continue to be in place and that such an account is used to keep brokerage monies on an annual basis via the BMF turnover declaration form.
Suggested wording acceptable to the BMF for confirmation from the bank is shown in appendix A or available directly from the BMF.
Summary of some of his actions :
Justin Wigoder, prosecuting, said the company acted as a brokerage and helped people who wanted to buy or sell boats.
It traded legally but ran into trouble in 2013 when it risked being wound up.
"Mr Shakespeare's initial response was to legitimately take out a loan which totalled £126,000, secured against assets. However that sum did not suffice so he turned to dishonesty.
"He secured a further loan for £140,000 from a separate company, using as security boats he did not own. They had simply been entrusted to his yard to be sold by him.
"When that amount didn't suffice, he turned to the straightforward theft of selling the boats and keeping the proceeds to himself," said Mr Widoger. Some of the cash was transferred to another firm.
One victim was pensioner Terence Emmerson, who arranged for the company to build a houseboat and later asked for it to be sold for £72,000. It was sold for £10,000 less than that.
"He never paid the money but sent him a cheque for £30,000 which bounced," said Mr Wigoder.
Michael Sanderson, 78, built a 58ft narrow boat named Speedwell and later arranged for the firm to sell it. The boat was sold for £43,000 but the cash was never handed over.
A long thread discussing it is here :
we do have one of those .........................
