ASIC has announced plans to heavily focus on SMSF property investment professionals in coming months, in an effort to thwart ‘spruikers’ in the industry.
The regulator’s CEO, Peter Kell, says that a certain level of market confusion when it comes to operators recommending that investors purchase a property through an SMSF, with some mistakenly thinking they don’t require and AFS licence.
“Let me be very clear – a person requires an AFS licence if they recommend that an existing or proposed member of an SMSF purchase a property through their SMSF,” says Kell. “This is because the vehicle through which the underlying investment is made is an SMSF and an interest in an SMSF is a financial product. It does not matter for licensing purposes that the underlying investment (real property in this case) is not a financial product.”
In the past year, Kell says ASIC has seen an increase in the number of advertisements pushing property purchases through SMSFs.
“We do not want to see SMSFs become the vehicle of choice for property spruikers. Where we see examples of unlicensed SMSF advice we will be taking regulatory action.”
The Property Investment Professionals of Australia (PIPA) has welcomed the increased focus on SMSF property investment advice regulation and says it also applauds the regulator for its recognition of ‘concerning property spruiking activities’.
PIPA chair, Ben Kingsley, says that with SMSF numbers growing at a rapid pace, ASIC’s decision to focus on this area is a positive move.
“Such news is welcomed strongly by PIPA, who has long held grave concerns about property spruikers, particularly those targeting SMSF investors,” says Kingsley. “As ASIC would be fully aware, reports of Australian investors suffering at the hands of unscrupulous marketeers are all too common and such cases have the potential to explode as interest in property investment via SMSFs continues to grow.”
But not everyone’s happy about the increased scrutiny. BGL Corporate Solutions managing director, Ron Lesh, says property spruikers aren’t a major issue in the industry.
“It’s not like we’re seeing that there’s a lot of SMSFs buying bad property. I think it’s more people jumping up and down and looking at some way that they can attack the SMSF industry,” he says.
“Generally, in most cases, if SMSFs are going to buy property they’ve discussed it with their adviser beforehand. I don’t think the spruikers are a big deal and we’re not seeing a lot of evidence to support the fact that they are. I just think we’re seeing a bit more of PR stuff out there.”