High costs of cover to protect public

Press, 11 June 1979, Page 13

High costs of cover to protect public

Members of some professional groups who occasionally “fiddle” their client’s funds, and are caught, are not forgotten in a hurry, least of all by their counterparts. Accountants, lawyers, and real-estate agents contribute to a fidelity fund each year to protect members of the public in cases of defalcation. They must pay an additional levy if their funds are depleted. Accountants have recently been asked to pay a levy of $lOO to boost their dwindling fund. The 2300 partners in practice normally contribute $5O to the fund each year, and the levy adds another $230,000. The money would be used to meet claims and current liabilities, said the executive director of the Society of Accountants (Mr K. R. Macdonald).

There had been no recent claim from Christchurch. Having to impose the levy was a matter of concern to the society, but it was in hte public interest, he said. Only one bad case was needed to drain a large proportion of the fund. Mr Macdonald said it was the first time since 1963 that the society had been forced to impose a levy. The lawyers’ fidelity fund, which is now worth $BOO,OOO was “quite healthy,” said the secretarygeneral of the New' Zealand Law' Society (Mr W. M- Rodgers). However, lawyers pay dearly for their fund. Each year solicitors have to contribute $lOO to the fund which has been running for about 50 years. They also paid additional levies of $lOO in 1975 and again in 1976 to boost the

fund to its minimum working level. (Barristers are exempt from these contributions and levies because they do not handle money, and are not regarded as a potential risk.) Real-estate agents are also “sitting pretty” in relation to their fidelity fund. It contains more than $250,000. Companies now have to pay only $6 a year and individuals. $2. The fund’s minimum working level is $150,000.

There had been only a few minor payments in its 16-year history, said the president of the Canterbury branch of the Real Estate Institute (Mr G. Kissell). There was little risk of defalcation, he said. RealEstate agents’ accounts were audited three times a year and they had to balance their books at the end of each month.