There’s currently no ability to hold main contractors to account for not holding monies in trust and there’s no requirement, apart from good will, to provide details on the amount and place of funds held. There are no penalties in the Act and no mention of enforcement.
Retentions must be held in in trust in a separate account and regular statements by the person holding the retentions must be provided to the subcontractor. In the event of business failure, the receiver or liquidator automatically becomes the trustee of the retention account to pay as they come due. Reasonable costs for managing the disbursement of the retention fund should be paid from the retention account. Regulations shall set penalties for entities that do not comply, and the regulations will stipulate the regulatory body responsible for prosecuting breaches.
What we want
The government to understand and address the major ramifications that impact the construction industry when a main contractor goes bust and retentions, that are the property of the subcontractors, are disbursed to other entities who are listed as secured creditors.