SPAA backs ASIC warning on property advice by unlicensed real estate agents.
The SMSF Professionals’ Association of Australian (SPAA) fully supports the ASIC statement issued on Wednesday that strongly warns the real estate industry about agents recommending investors to use an SMSF to invest in property.
SPAA CEO Andrea Slattery says: “The ASIC warning is both timely and needed in light of the enormous media attention that has been given to this issue in recent months.
“From SPAA’s perspective, it’s been our constant stance on SMSFs investing in property that there are technical dangers, and as such we have always recommended that trustees get professional licensed advice, either from a professional SMSF Advisor who holds a licence or is an authorised representative of a licensee.
“We took that position a year ago in a detailed technical bulletin to all our members warning of the risks of property investment, and it remains our position today.”
She says property is an investment option for an SMSF, but, like any investment, it must be suited to the fund and take into consideration the members’ circumstances.
“In relation to property, there may be an interest in this asset class now because, in a low interest environment, people are looking for investment opportunities with higher yields than cash or bonds, and while there are still fears held about equities.
“It’s exactly because of this heightened interest in property that the regulator should be on the front foot to warn the real estate industry that its members must use licensed advice when recommending setting up an SMSF or recommending an SMSF acquires a property.
“ASIC is the ‘consumer awareness’ regulator and gained new powers on 1 July 2013 to target inappropriate marketing and spruiking within the Financial Services sector.
In its statement, ASIC said it was concerned that with the increased popularity of SMSFs and property investment, adding that real estate agents may not realise they are providing financial product advice and need an Australian financial services (AFS) licence when making recommendations or statements of opinion to a person to use an SMSF to invest in property.
ASIC has written to the REIA, the state and territory real estate institutes and property investment associations (real estate bodies), setting out its concerns and asking the real estate bodies to communicate these to its members.
