Consumer regulators have launched a national campaign to warn property investors about property spruikers claiming to be “wealth creators”.
The Acting Commissioner for Consumer Protection in Western Australia, David Hillyard, is encouraging consumers to be sceptical about property investment seminars promising big returns with low risk.
“There are many cases where people have signed up to deals during these property investment or ‘wealth creation’ seminars and have lost money. They have paid a lot of money for advice and coaching but not realised the returns they were promised,” Hillyard said.
“While there are legitimate companies that offer credible property investment advice and opportunities, equally there are a number of rogue operators that can apply high pressure sales tactics at ‘free’ seminars to persuade people to sign up on the spot.”
When it comes to protecting consumers from property spruikers, mortgage brokers play an important role. A spokesperson from the Department of Commerce, Western Australia told Australian Broker
that there a number of “tell-tale signs” a broker should look out for, most notably if their client is seeking finance for a property sight-unseen.
“Investing interstate or off-the-plan is not necessarily a bad thing, so if that’s what a client wants a loan for it would be good for mortgage brokers to enquire how their clients came to learn of the investment opportunity.
“If they reveal it was at a seminar the broker should advise them to get independent verification of whatever claims made at the seminar convinced them this particular investment or investment scheme is best for their personal financial interests.
“Caution them about the pitfalls of relying on the advice of unlicensed property spruikers. It’s amazing what a quick internet search can reveal about particular seminar promoters whose own marketing material gives the impression of credibility.”
Protecting consumers from property spruikers is also a broker’s responsibility as it could damage the mortgage broking industry’s reputation too.
“Obviously mortgage brokers make an income from pairing clients with loan providers but it is in their long-term best interest to build a client base of purchasers who are happy with their property investments in years to come, and not resentful of the mortgage on a bad investment deal they rushed into,” the Department of Commerce, Western Australia told Australian Broker
The national campaign ambassador is financial expert and consumer advocate, Paul Clitheroe.