RACCA Australia published an article in December on the establishment of a retention trust scheme to protect sub-contractors in the building industry in the event of a construction company’s collapse.
The retention trust scheme has now commenced.
The aim of the retention trust scheme is protect subcontractors’ retention money in trust, even if a construction company becomes insolvent. The scheme is a result of the NSW Government’s response to the Collins Inquiry, which investigated the causes of insolvency in the building industry.
The retention trust scheme will involve imposing requirements on construction companies to hold retention money in a trust fund for sub-contractors. Head contractors will now be responsible for holding retention money in their accounts with NSW Fair Trading conducting regular audits to ensure they comply with the requirements. NSW Fair Trading will also conduct a full review of legislation to examine all security of payment laws.
The retention trust scheme is part of the Building and Construction Industry Security of Payment Amendment (Retention Trust Money Account) Regulation 2014.
More information about retention money can be found here and more information about security payments can be found here.
Image via Pixabay.