Proposed amendments to retention money regime include personal liability for directors

Following a review of the retention money scheme for construction contracts under the Construction Contracts Act 2002, the government will introduce legislation to clarify and strengthen existing requirements for the protection of retention money.

Proposed changes to the retention money scheme include:

• retention money must be held on trust in a separate bank account and will be unable to be co-mingled with, or used as working capital
• improving transparency of the retention money held by requiring a contractor to include in a payment schedule the amount of retention money held and the form in which is it being held
• failure to comply with these requirements will be an offence, with directors being held personally liable for up to $50,000, and companies facing a maximum fine of $200,000.

While the government has signalled that it intends the legislation to be passed into law in 2020, the Bill has yet to be introduced to Parliament.