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A word of warning from ASIC

12 Nov 13

Agents are being warned about providing real estate advice to investors regarding using a self-managed superannuation fund (SMSF) to invest in property.

The Australian Securities and Investments Commission (ASIC) says that agents must ensure they are properly licensed to provide advice before they recommend using SMSFs to invest. ASIC is working with the Real Estate Institute of Australia (REIA) to make agents aware of their responsibilities.

Real estate agents require an Australian financial services (AFS) licence in order to make statements of opinion or recommendations to anyone using an SMSF to buy property. Agents must also ensure they comply with the Corporations Act 2001.

ASIC believes that real estate agents may not be aware of these obligations, which is particularly risky given the rise in popularity of SMSFs and property investment. It has written to state and territory real estate institutes and property investment associations, along with REIA, setting out concerns and asking the real estate bodies to communicate these with members.

ASIC Commissioner Greg Tanzer said ASIC's role is to regulate the gatekeepers in relation to SMSFs.

"We want to ensure the SMSF sector remains healthy and vibrant so investors can be confident that, if they are receiving advice about investing through an SMSF, their advisor holds an Australian financial services licence and is aware of its obligations," he said.

According to ASIC, a person without an AFS licence or AFS licensee authorisation is only eligible to provide factual SMSF information to consumers. If a person is found to carry on unlicensed financial services business, they may be subject to imprisonment for two years, a fine of up to $34,000 or both.

A convicted company may be liable for penalties, too, and can be fined up to $170,000.

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