FFC backlog cleared says new EAAB CEO

FFC backlog cleared says new EAAB CEO

MAIN IMAGE: Mamodupi Mohlala-Molaudzi is the new CEO of the Estate Agency Affairs Board (EAAB).

The new CEO of the Estate Agency Affairs Board (EAAB), Mamodupi Mohlala-Molaudzi, together with the board says they have been working hard to turn the embattled regulator of the property industry around – starting with an alleged clearance of the regulator’s backlog of thousands of unissued fidelity fund certificates (FFCs).

The advocate has been less than a month at the helm of the EAAB but says in this short period they’ve succeeded in issuing 27 000 FFCs to eradicate the huge backlog. “I would like to report that we have been able to clear all the fidelity fund certificate backlogs,” she told the Portfolio Committee on Human Settlements during a briefing held in Cape Town on Tuesday 26 February. She added they had worked on this tirelessly since 1 February and all new applications, all renewals and all amendments have been processed.

Her claim impressed committee chairperson, MP Nocawe Mafu, who said the late issue of FFC’s had been the big issue raised by previously disadvantaged agents around the EAAB during the committee’s roadshow on the new Property Practitioners Bill.

Background

At the start of the briefing, the Mafu said the EAAB and the Community Scheme Ombudsman Service (CSOS), “the problem kids in the house” of the Department of Human Settlements (DHS) were there today to report back to the committee on their progress made in addressing certain problem areas in their entities.

The previous year, while still under an acting CEO, the EAAB had failed to present their annual report and financial statements to the committee at a public briefing session for all the Department of Human Settlements (DHS) entities while the CSOS revealed there were internal investigations ongoing into alleged financial misconduct at this entity. Both the Chief Ombud and Chief Financial Officer of the CSOS had been suspended pending an ongoing investigation into an illegal investment of R80 million on behalf of CSOS in scandal-hit VBS bank.

Read more here

The property sector is still dominantly white

The first thing that was clear from the EAAB’s new CEO’s presentation was the lack of progress on registering more black (used broadly to include black, coloured and Indian persons) persons as estate agents. Out of the around 49 000 FFC’s issued in the 2017/2018 financial year more than 80% were issued to white estate agents, for example, out of the 7 634 FFC’s issued to principal estate agents, 6 727 (87%) were to white agents.

Of even greater concern to the committee was the lack of transformation evident from the statistics on the registration of intern estate agents. In 2018 a total of 15 706 white interns were registered, more than double the total of 6 371 black interns for the same period – this despite the EAAB’s One Learner One Estate Agency programme which was launched in December 2014 with the promise to bring more young black interns on board.

Mafu said they know now that this programme had not produced half of what was promised by the EAAB. “Looking at the registration of estate agents what has become crystal clear, is that we are very far from turning things around,” she said and told Mohlala-Molaudzi that as new CEO her focus should be on transformation.

No more late FFC’s?

Mafu said she was very impressed with the turnaround on the late issue of FFCs. “The question is what was happening? Why within a month that you are there, it is turned around – this has been one of the big problems in the EAAB,” Mafu commented then added she ascribed the turnaround to improved management. “It is just about consequent management in the EAAB that was not being adhered to,” she said.

The CEO’s announcement was met with surprise in the property industry. Jan le Roux, chief executive of industry body Rebosa said while impressed with the CEO’s take charge approach, he believed she has been misinformed about the clearance of the backlog as there are still many FFC’s that have not been issued.

“I am very glad that a CEO of the EAAB has been appointed after more than a year of uncertainty and am very impressed with what appears to be a “can do” perspective. We will support Mohlala-Molaudzi as best we can. I do unfortunately believe that the officials at the EAAB have misinformed the CEO. Numerous FFC’s have still not been issued and turnaround times are stymied/negated by the total absence of responses on enquiries/complaints. Hundreds of estate agents are still denied an income. We have communicated this to the EAAB,” explained Le Roux.

More on the turnaround strategy

Mhlala-Molaudzi said the turnaround strategy for the regulator so far had involved capacitating the finance department by adding financial staff but there is still a vacancy for a chief financial officer. She said all critical positions are expected to be filled by June this year.

The EAAB going forward will be audited by the Auditor General. Last year an audit showed there was problems with the entity’s financial systems. Following this up with their auditor for the last five years, the Joburg-based firm Ngubane & Company, there was a breakdown in relations which contributed to the regulator’s late submission of their financial statements to Parliament reported EAAB board chairman Nkosinathi Biko.

Nonetheless the EAAB succeeded in showing a profit of R13.5 million for 2017/18.

Last year’s audit also found glaring problems with the regulator’s IT system Biko said – hence a chief information officer will also be appointed.

Concerning the One Learner programme, the CEO said it will continue. She said they currently have 390 interns registered on the programme, but Mohlala-Molaudzi is confident an additional 1 610 will be registered before the end of March. To that end advertisements will run this coming weekend in the mainstream and local newspapers with 7 March as the closing date for applications. Her only concern was whether the Services Seta will come through on money commitments to the programme.

Lastly, with regards to transformation, she said a clear strategy was needed and an executive will be appointed in that regard. “Transformation is receiving my immediate attention,” she promised.

Reasons for lack of transformation

Phumzile Makosana, EAAB board member on transformation, told the committee that he had his doubts on whether the property sector will be transformed. Having been in the property industry for more than a decade, he blamed the lack of transformation on the regulatory obligations brought in by the EAAB since 2008 to professionalize the sector. “We as the new dispensation made it very difficult to enter the profession,” he said explaining that it has become expensive to become an estate agent, for example it costs an estimated R50 000 over three years just to become a fully registered agent. To become a principal agent takes two years longer and costs even more. “Our people don’t have money,” he said.

Mafu, however, disagreed with him saying that is why the new bill had an entire chapter on transformation and asking him if he had read it and understood it.

DHS Director General Mbulelo Tshangana said the figures on interns indicates that estate agencies are recruiting young white interns instead of black interns and this must be addressed. He said the reason why the chairperson referred to the bill’s chapter on transformation was concerning the establishment of a transformation fund. “You have to fund transformation, it won’t happen automatically,” he said.

Le Roux said: “The EAAB has over a number of years taken initiatives that favour bigger estate agencies whilst making it more challenging for smaller ones. An individual can more affordably be employed than running his/her own business. Costs such as registration fees, CPD fees, trust account and business account audits come to mind. New black entrants to the industry are almost obliged to join existing, mostly white owned agencies, instead of being able to launch their own businesses.”

In short on CSOS:

  • the entity has a new board
  • disciplinary charges are being brought against the two suspended executives
  • the Special Investigations Unit will be approached to investigate whether said executives committed criminal acts
  • a court application has been made to the Johannesburg High Court to retrieve the R80 million invested in VBS Bank

In closing, Mafu said the presentations made had given them a glimmer of hope for the EAAB and the CSOS.

Read more on the new CEO here

Do you share MP Mafu’s optimism that the two entities, the EAAB and the CSOS are on the right track to turn their organisations around? Are there any other areas that you say they should focus on? Email your comments to editor@propertyprofessional.co.za.

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