ASIC has sent a stern message to members of the real estate industry that they must be licensed appropriately before they are permitted to recommend investors use a SMSF to invest in property.
ASIC said in their written message to the Real Estate Institute of Australia (REIA), that it was concerned that with the increased popularity of SMSFs and property investments, real estate agents may not realise they are providing financial product advice and that they need an appropriate Australian financial services licence (AFSL) to make recommendations or statements about these products. ASIC had asked the REIA and the state and territory real estate institutes and property investment associations that these concerns are adequately expressed to their members.
Greg Tanzer, the ASIC commissioner has said that the role of ASIC in regards to SMSF was to, “regulate the advice providers, SMSF auditors, and providers of products and services to SMSFs.” The corporate regulator commissioner also reiterated that, “we want to ensure that the SMSF sector remains healthy and vibrant so investors can be confident that, if they are receiving advice about investing through an SMSF, their adviser holds an Australian financial services licence and is aware of its obligations.”
An added concern for ASIC was the reported increase of real estate agents offering commissions or benefits to financial advisers for recommending investors use an SMSF to purchase the real estate agents’ properties and said that such commissions or benefits may be “conflicted remuneration, and financial advisers could be banned from receiving them under the Future of Financial Advice (FOFA) reforms.”
The REIA is working closely with the ASIC concern and Amanda Lynch CEO of REIA commented that, “we believe education is an important part of informing agents about their obligations and in terms of any advice on self-managed super funds, it’s imperative that only licensed financial advisers provide this advice.” She added that although, “there had been cases where agents had crossed the line, REIA, “are very keen to work with ASIC on developing some tools. We are looking at developing some guidelines to inform agents on this very important issue.”