Join Australia's most dynamic and respected property investment community

Interest bearing account

Discussion in 'Legal Issues' started by Befuddled, 22nd Apr, 2016.

  1. Befuddled

    Befuddled Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    251
    Location:
    Sydney
    This is a question for the lawyers.

    Legally, can it be argued that an account that offers ~0.01% interest on funds does not count as an "interest bearing account"?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,989
    Location:
    Sydney
    Are you talking about investing a deposit?

    If that is the case the agent has possibly breached their fiduciary duty - but not making another $50 for the parties.
     
  3. Befuddled

    Befuddled Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    251
    Location:
    Sydney
    Yes @Terry_w , deposit of approx 60k was invested with St George for 11months at the bank's default interest rate for controlled monies of 0.01%, then switched to a better rate for a couple of weeks. Grand total of $11 interest which was then split with the vendor.

    The solicitor has basically tried to blame the bank for refusing to back-date interest. I feel the responsibility lies with the person who chose the account that pays 0.01% interest in the first place. "Fiduciary duty" is interesting...
     
  4. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,384
    Location:
    Sydney
    Was it a trust account ? Are you talking about a bank account described as interest bearing but it pays bugger all ?

    Westpac has a "high interest cash management account" that pays 0.01% on balances up to $200K and then beyond that it pays a tiered. I reckon its misleading and deceptive conduct to call it that. Other banks also do this. Most transaction accounts dont even pay interest. Often only online accounts pay a better rate.

    Does that mean its wrong ? NO. You can choose to deposit funds elsewhere. There is no obligation on any bank to pay what you consider a market rate. They do issue a PDS and rate information online after all.

    Trust accounts often require that both parties request interest and share it. Its a trivial matter. You plan to sue ?? I doubt there is a fiducial duty to maximise the value. So ING pays 2.2% and Bankwest is 2.1% and you complain Bankwest was too low.
     
  5. Befuddled

    Befuddled Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    251
    Location:
    Sydney
    The deposit was paid to a trust account.

    However there is a clause in the contract that basically states the vendor can invest it in any interest bearing account they like so it's entirely plausible that that money could have been moved. Note that the vendor's deposit agent is defined as "the vendor's solicitor or agent".

    Just trying to understand what's happened because the whole thing smells fishy

    And yes, some of the "high interest" accounts are atrocious
     

    Attached Files:

  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,989
    Location:
    Sydney
    Yes they could be held to blame, or the agent, who ever held the money on trust.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,563
    Location:
    Sydney or NSW or Australia
    Looks pretty standard for treatment of the deposit - more of a pia for the deposit holder.

    How is the interest distributed. Has the agent taken TFN? Otherwise you'll have 50% of the interest withheld.
     
  8. Befuddled

    Befuddled Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    251
    Location:
    Sydney
    TFN was collected. Statement of final balance was provided