News & Media
The Pitfalls of Short Courses and SMSF's
18 Nov 14
REIA recently spoke before the Parliamentary Joint Committee Inquiry into the Financial Services Industry, which is considering proposals to lift the industry’s professional, ethical and education standards. Our involvement with this inquiry was at the request of the committee, although REIA has been pro-actively working to address community and industry concerns about the blurring of lines between real estate agents and the provision of financial advice. This matter is a complex one and in many ways is an issue that stems from the training standards, both for financial service providers and real estate agents alike. REIA firmly believes in setting high standards and training within our profession and has strongly supported the Federal Government in its moves to ensure a more rigorous regulation of training providers.
While we recognise that for the most part, few if any, real estate agents are involved in the promotion of SMSFs, some of our members report that there is increasing demand from accountants who managed SMSFs on behalf of trustees as well as vertically integrated organisations that approach agents seeking suitable properties.
We were pleased to be able to report to the committee that the vast majority of real estate agents do not make estimates on rental returns or capital gain on properties. Those that do, use information that is publicly available through agencies such as the Australian Bureau of Statistics and the Bendigo and Adelaide Banks and REIA’s Real Estate Market Facts (REMF) and the Housing Affordability Report (HAR). Importantly, no payment is sought for this advice as it forms a basic part of being a real estate agent.
However, the current federal inquiry into Australia’s financial system is also concerned about the quality of information provided to SMSF operators as well as the fact that some people borrow to purchase property as an SMSF investment.
These issues are increasingly attracting media attention and are often pitched around the theme that there needs to be a ‘crack down on property spruikers’ who are capitalising on the recent growth in house prices, particularly in the eastern state capital cities.
Only this week, the Australian Security and Investment Commission announced it had begun proceedings in the NSW Supreme Court seeking interim and final orders to prevent property investment promoter, Park Trent Properties Group, from carrying on an unlicensed financial services business involving the promotion of SMSFs to buy investment property.
When REIA spoke to the Parliamentary Committee, we detailed our knowledge of clusters of agents in certain areas, who had a dual role in also being a financial planner but that the cost of the personal indemnity insurance required to offer financial advice was a sufficient deterrent for most real estate agents. On the flip-side, what has concerned REIA greatly is media reports that some financial advisers are seeking fast-tracked courses that offer real estate licences. These courses do not require attendants to sit any exams, are completed solely online and have a very suspicious 100 per cent success rate.
While these sort of courses are in the minority and exist only on the outlier of the industry, REIA has been working very closely with the Australian Skills Quality Authority (ASQA) to improve the integrity of registered training organisations (RTOs) offering real estate courses with the end result that we would like to see those RTOs organisations offering ‘no course, no examination 100% success rates’ deregistered. REIA is obviously very concerned about the repercussions that stem from these sorts of courses, if for no other reason than that people who undertake them find it very hard to secure work within the sector as the courses are not at all regarded by established real estate agents.
The recent announcement by Federal Industry Minister, Ian Macfarlane to provide a funding boost of $68 million over four years should give ASQA a sharper bite in being able to address poor training practices. REIA would also like to see ASQA sharpen its focus on a risk-based approach to regulation, which will scrutinise those disreputable Registered Training Organisations (RTOs) and brokers offering quickie courses that compromise industry standards.
While for the vast majority of our members, these debates over standards in the financial services industry, the promotion of SMSFs and the existence of quick courses do not interfere with the professional manner in which they undertake their role, it pays to be mindful of the impact that unscrupulous operators can have on our sector and the need to close the loopholes that allow these ‘spruikers’ to operate.
This article is brought to you by REIA
Chief Executive Officer, Amanda Lynch