ASIC warns real estate agents on early release super advice

3 April 2020

The Australian Securities and Investments Commission (ASIC) has written a letter warning real estate agents against giving advice to under pressure tenants about accessing early release superannuation. 

The letter, made public today, states that “ASIC is aware that some real estate agents are advising tenants who are unable to pay their rent, or who may find themselves in such a situation in future, to consider applying for early release of their superannuation”. 

“Recent media reports and social media commentary outlining this conduct by some real estate agents is of significant concern to ASIC and, we would hope, you,” the letter said.  

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“We are concerned that the conduct by real estate agents referred to above may:   

• Constitute unlicensed financial advice in contravention of section 911A of the Corporations Act; or 

• Not be in the best interests of individuals in contravention of section 961B of the Corporations Act.  

“Financial advice must only be provided by qualified and licensed financial advisers, or financial counsellors, not by real estate agents who neither hold the requisite licence, nor are an authorised representative of an Australian Financial Services Licensee,” the letter said. “The Corporations Act imposes significant penalties for a contravention of section 911A. For individuals this can be a maximum of five years imprisonment, and/or a fine of up to $126,000 (600 penalty units), and for corporations a fine of up to $1,260 million dollars (6000 penalty units). 

“Tenants facing financial difficulty need sound financial guidance and potentially debt counselling. Specifically pointing them to and recommending them to consider the specific possibility of accessing superannuation is, again, likely to amount to a breach of the Act.” 

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Up until now regulators have let not just real estate agents, but also accountants, mortgage brokers, product provider call centres, and content writers give as much dodgy financial advice as they like. Regulators have focused all their efforts on persecuting licensed advisers. They have effectively pushed consumers away from licensed advice into the arms of dodgy unregulated providers.

But the moment one of these unregulated advice providers dares to suggest withdrawing money from union funds, it suddenly becomes important to enforce the law against them. Surely ASIC's role should be to enforce the law all the time to protect consumers, not selectively to benefit unions?

You are SO on the money. ASIC is desperately protecting its collective arse. Sing the praises of industry funds.... whoops they're in trouble! Better get a press release out there to try and mitigate fallout!

This demonstrates yet again the stupidity of ASIC. If a client comes to a licensed adviser for this advice they have to provide written advice which ticks off on all BID steps. As much as ASIC thinks this is a quick and easy process it takes significant time and in turn cost to the adviser. While ASIC thinks advisers should all work for free, the result is the client who is already financially struggling cannot afford to get the advice. ASIC you have created this problem, and writing a strongly word letter isn't going to fix this. You have failed all clients who now desperately need advice but won't get it due to the cost.

Any advisor who is charging a fee that respects his qualifications, experience, compliance requirements and business overheads will need to charge a fee of at least $3,300 to provide advice on this.

We have to conclude that ASIC comprises the most ill-informed, ignorant and just downright stupid bunch of individuals, ever appointed to look after anything. First they exempt themselves from the impartiality rules pertaining to the Public Service.
Then they crucify financial advisers, denying the public of qualified and experienced help when it is needed. They outsource their regulatory responsibilities to unaccountable agencies such as FASEA and AFCA. They say the benefits of SMSFs are well known, but basing its arguments on sewer-grade data, deride them anyway. At the same time they support industry funds - because they suit a left-wing, post-modern paradigm, and because they are purportedly "cheap". ASIC (absent any objective test) dismisses arguments that efficiency, or quality might actually benefit consumers, but puts no effort at all into understanding the structural challenges facing industry funds - which ASIC and APRA are belatedly writing to in order to be able to say they were actually doing something about known liquidity issues. It is a classic regulatory monopoly that charges exorbitant fees, with no oversight at all - and then divert resources from the tasks they say those fees support. ASIC, you are the epitome of the swamp. A day of reckoning is coming for ASIC and Shipton, Press, Chester, et al. will be flushed out by the new rains.

you nailed it. fools. if regulations are so onerous that they are ineffective then those regulations need to change so they are effective.

highly qualified people like you and I are sitting idly by tied up in knots because we cannot help people.

this is immoral. this is wrong. we should be doing whatever we can to help.

ASIC leadership needs to be totally gutted with each rank and file officer within it dismissed and replaced.

ASIC on the ball again... perhaps the renters should go to the call centres of their super funds who will providethem with "general information"

I wonder if ASIC will use our levy to investigate the real estate agents, or maybe the real estate agents could pay a levy for their own investigations? Only fair after all, user pays isnt it? Surely asic cant subsidise its investigations into non licensed people with licensed peoples fees? Thats like taking a trail commission from all clients and only working for a few....theres the pot, then the kettle, then theres asic.

So now ASIC are concerned about advice Real Estate agents may be providing to their clients ?????
This has been going on for years and years....not investigated, not persecuted...just left to run wild.
How about blatant Real Estate advertisements for properties that boldly claim
" Fantastic Investment Opportunity for your Super Fund " !!!....compared to what ?
It doesn't matter what it's compared to......we just want to sell the it's a fantastic opportunity !!
ASIC have focused much of their effort in attacking and destroying hard working and ethical advisers and have done nothing about other sectors at all.
They are biased, discriminatory and inherently vindictive.
They are also completely out of control and drunk with power and resources.
It's no wonder they don't go after industry super funds or their advisers when their default option for employees is Australian Super.
I would like ASIC to confirm how many of their employees benefited from the Qantas frequent flyer deal and if Qantas is the preferred airline for ASIC related flights ?
An absolute disgrace and the Govt is shit scared to do anything because ASIC are in control of the Govt right now.

The Real Estate industry has and still is one of the most corrupt going and ASIC as usual show what a bunch of clowns they are by hitting them with a feather duster. Just another joke by this incompetent bureaucracy.

So '
the have the facts/proof, are they going to prosecute as they would for for financial planners ?
if not please explain the law for some but not others.
Do they expect real estate agents to report their own breaches or are they going to do their job ? if not why not /.

It is well established that individual undergoing financial hardship may access their superannuation early. financial hardship has bee understood to include tertiary tuition, unemployment beyond a specified period etc.I see no objection to an estate agent suggesting to someone who cannot pay his rent that he consult a financial advisor with particular reference to getting an early refund o f superannuation.. Unemployed persons who cannot pay their rent deserve all the advice that they can get. Their options should not be concealed from them.

This is just a media release to show the sheep that ASIC is out there and they have a big stick. But they don't do anything about it. What has ASIC done to use this big stick on Funeral directors who tell widows to deduct funds from their own super funds to pay for their husband's funeral costs? Yep! Crickets! What about the Doctors that have a slick process to get money out of Super funds for weight loss surgery and IVF fees? yep. Doctor's know best. Don't get me started about the unlicenced solicitors who give Super fund advice. How can they state that "you will get more with us" when the TPD sum insured is $500,000? I am sure they don't want a piece of the action too when the claim is paid...….no! Getting a claim paid is not a win, it is an insurance claim. Financial Planners are the ones that give advice, not Doctors, Solicitors, Funeral Directors or Real estate Agents. Do Accountants give advice at each annual review to see if the SMSF is in the best interest for the client to keep?

Seems to me this is a hastily through together shot across the bow to send a message - leave our Industry Super mates alone. Certainly I have never seem ASIC turn from their guns so quickly (they were busy killing off the remains of retail/FP now running to the rescue of Industry Super) in the space of a few weeks, draft letters and find the address of Agent Associations. Clearly ASIC is scared and prepared to be aggressive in defending their master (Industry Super).
Seriously, how much trouble are these funds in?
Has anyone witnessed ASIC man the guns so quickly in defence on anything every?

Why not litigate ASIC? Pretty easy case to win.

Given that the publicly available fact sheets regarding early release of Super are on the Treasury website, ASIC should go & prosecute the Treasury Departmental Secretary for making them publicly available. It is no crime to share information to anyone who doesn't know about this updated arrangement. If you are not charging a fee, and you do not recommend any particular course of action (apart from sharing general information), there is no crime being conducted. If anything, we should charge the Govt for the provision of free advertising.

When government - in pursuit of good intentions - tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player. Milton Friedman

When the prime minister is on tv every morning with his message about everyone sharing the burden and the real estate industry decides to send a tone deaf, poorly drafted letter to all their tenants that directly contradicts the PM's messaging expect them to get whacked with the nearest available stick - just happened to be ASIC

What about property managers debt collecting without a credit lic.

They don't compete with Industry Super FUM.

Encouraging someone to access their super on financial hardship should rightfully be targeted as financial product advice. Providing detail about conventional early release conditions, and/or the new COVID-19 arrangements without a corresponding statement of opinion or recommendation is factual information. Factual information does not require licensing. Otherwise, somewhat ironically, MoneySmart would be in breach of the licensing regime.

agreed. And so would Treasury, given they provide a raft of fact sheets on the subject. This is actually an acceptable form of "intrafund" advice. lol

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