Stop flogging SMSF property investment, ASIC tells real estate agents

by Adam Smith18 Jul 2014
ASIC has issued a warning to real estate agents over SMSF property investment, saying they may be breaking the law.

In a speech to the CPA Australia SMSF Conference, ASIC commissioner Greg Tanzer said the regulator was aware that some real estate agents and property advisers were recommending clients use their self-managed super funds to invest in property. Unless the person recommending such an investment carries an AFSL, they were in breach of the Corporations Act, Tanzer said.

"Providing financial product advice includes making a recommendation or a statement of opinion to a person to set up an SMSF or use an existing SMSF to purchase property through that SMSF," Tanzer said.

Tanzer said many real estate agents and property advisers may not be aware that they were providing financial product advice by touting SMSF property investment, but he warned that the penalties for providing unlicensed advice were stiff.

"A person convicted of carrying on an unlicensed financial services business may be subject to a fine of up to $34,000 or imprisonment for two years or both. If a company is convicted it may also be liable to penalties, including a fine of up to $170,000," he said.

Tanzer said ASIC had worked with state and territorial real estate bodies, as well as the REIA, to educate the induustry. He said the regulator was now working with individual business suspected of engaging in unlicensed conduct "to help them understand their obligations".

COMMENTS

  • by Robert B 18/07/2014 10:16:11 AM

    Any wonder the population is so financially illiterate when it is illegal to talk about money and investments. Shouldn't as a society we be encouraging more discussion about money, not less. Even accountants can't discuss how investments work with their customers. Go figure? After 12 years of school education shouldn't every one have some of these concepts down pat?

  • by Regional Broker 18/07/2014 10:16:43 AM

    About Time , they cannot offer Investment or Lending advice.

    They have been warned , it also fits with ASIC setting up a "Task Force", to look at "One Stop Shops" .

  • by Daniel 18/07/2014 10:25:51 AM

    I'm not one to go in to bat for RE agents usually, but to be fair, a lot of agents I know will say things like, "you can do this through a SMSF". ie factual reporting rather than specific advice. Perhaps not as rampant as made out.