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All explainersThe Upshot

Deposit flicking: who’s really holding your money?

Appears in News

A growing practice is moving buyers’ deposits out of real estate agents’ trust accounts, and conveyancers are worried. Here’s what you need to know in 60 seconds.

  1. Okay, so what is deposit flicking? A real estate agency sends a buyer’s deposit to a third-party provider to hold until settlement. The money doesn’t stay in the agency’s own regulated trust account.

  2. Who is it affecting? Buyers and sellers whose deposits are moved, and the agents who use these services. Conveyancers are caught up too: they have to track where the money sits and whether their clients properly agreed to it.

  3. The story so far: At least 170 conveyancers petitioned for a crackdown. One provider tried to stop a solicitor from criticising its model, and the court rejected the bid. NSW Fair Trading began investigating in July.

  4. Why it matters: A deposit is often a buyer’s life savings. If a third-party holder collapses, gets hacked or ends up in a dispute, it’s unclear whether the usual compensation fund protections apply.

  5. The arguments for and against: Providers say outsourcing reduces trust account admin (one claims by 90%) and speeds up settlement. Critics, including the Australian Institute of Conveyancers NSW, say it breaches agents’ obligations and could sidestep new anti-money laundering duties.

  6. How it could be resolved: NSW Fair Trading could issue clear guidance or tighten the rules on who can hold deposits. AUSTRAC, the anti-money laundering regulator, has already said agents’ obligations apply wherever the deposit sits.

  7. What will bring it unstuck: Timing. Conveyancers fear a decision will stall once the government enters caretaker mode before the March 2027 NSW election. Meanwhile, the legal uncertainty lets the practice keep spreading.

  8. What’s next? Watch for Fair Trading’s findings, any AUSTRAC enforcement and whether other states act. Until then, buyers should ask where their deposit is being held and verify every payment instruction directly.

Sources: Australian Conveyancer, Attwood Marshall Lawyers, Dott & Crossitt