The Australian Securities and Investments Commission (ASIC) has signalled a crackdown on unlicensed property spruikers who advocate self-managed superannuation fund (SMSF) investment without the proper authority.
In a letter to the Real Estate Institute of Australia (REIA), ASIC said there has been a spike in the number of SMSF property investment promoters, who may be breaking the law if they are not licensed to provide financial advice.
It said individuals and corporations cannot advise investors unless they have an Australian Financial Services (AFS) licence, but real estate agents may or may not know this.
The regulator said it was also aware of some real estate agents giving financial advisers commissions for recommending SMSF property investment, which may be seen to influence the quality of advice and therefore banned under the Future of Financial Advice (FOFA) reforms.
In the letter, it warned real estate agents that breaches of these regulations could carry a penalty of up to two years in prison, or fines of up to $34,000. As the gatekeeper, it said harsher action is taken against agents who knowingly flout the restrictions. "In the event that real estate agents are operating in circumstances where an AFS licence is required, they must immediately cease offering and providing financial services until such time as an AFS licence is obtained or they become a representative of an AFS licensee," ASIC said.
