Farm Ireland
Independent.ie

Tuesday 17 October 2017

Tighter rules mean 'selling a heifer is treated the same as selling a house'

Caitriona Murphy

Caitriona Murphy

New regulations affecting the mart sector could significantly reduce the level of credit available to farmers and dealers in the future.

An ICOS delegation met Minister for Agriculture Simon Coveney last week to highlight possible problems caused by the new regulatory body, the Property Services Regulation Authority.

Tighter regulation of the banking and property sectors has led to increased regulation in the mart sector, even though the mart trade was not a primary target for the new laws.

The main aim of the new authority is to ensure continuing best practice and to generally protect the consumer rights of buyers and sellers using the services of auctioneers, according to ICOS marts executive Ray Doyle.

"This is against the backdrop of enhanced regulation for the wider financial services industry," he explained. "Livestock marts have traded successfully since their establishment almost 60 years ago, providing a service where livestock are traded on an open market and where sellers have always been guaranteed payment.

"That guarantee of payment has never been reneged on or broken during that time."

When livestock marts started in Ireland, their auctioneers' licence was regulated under the 1947 House Agents Acts. They required the mart to renew its livestock auctioneering licence with the District Court every year and to deposit a bond of €12,000, together with an accountant's report, in order to comply with regulations as set down by the Department of Justice.

As animal welfare, health and hygiene became a national issue in the 1960s, marts were also, and continue to be, regulated by the Department of Agriculture under the 1967 Livestock Marts Act.

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However, since July 6 last, the livestock marts auctioneers' licence is now regulated under the new Property Services (Regulation) Act 2012. The legislation applies to all property-related transactions including the sale of livestock.

"Basically, it means that selling a heifer is treated the same as selling a house," said Mr Doyle. The Property Services Regulatory Authority (PSRA), established under the act, operates under the aegis of the Department of Justice and Law Reform.

The new legislation requires, as did the old 1947 legislation, that the total amount standing to the credit of a mart's "client account" must, at all times, be sufficient to meet all client liabilities.

Depending on the level of cash reserves of each individual mart, this could limit the amount of credit that the mart can extend to individual buyers.

Declining to comment on how much the new legislation could affect mart trade, Mr Doyle said the new regulatory environment would take some time to evolve.

"The boards of the co-operative marts are currently in the process of identifying any potential effects of the underlying legislation on their general terms of trade," he said. "The agricultural sector is vital to the economic well-being of this country. A very important segment of this industry is the livestock marts sector. It enables the trade of over 1.7 million cattle, 700,000 sheep and has a turnover in excess of €1bn.

"Co-operative marts will continue to be the premier place to sell livestock.

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"The adoption of these new regulatory measures will help to reinforce that role."

"Mart customers have always had the benefit of the guaranteed cheque. These tighter new regulations will enhance the traditional sense of security of payment valued by all farmers in their dealings with marts."

Meanwhile, the legislation also includes other regulatory changes:

• The PSRA has the power to grant or revoke auctioneers' licences to marts, it can carry out inspections and audits and make prosecutions with fines of up to €250,000 or imprisonment where breaches of statutory regulations occur.

• The regulations include the provision of professional indemnity insurance for at least twice the mart's commission income, tax clearance certificates for all co-op board members and a formal letter of engagement that must be signed before auctioneering services can be provided.

• Marts must also contribute to a general compensation fund which has to have at least €4m in place before 2015.

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