Reports that property developers are offering advisers commissions to promote their developments to self-managed superannuation funds (SMSFs) are being heavily scrutinised by the regulators!
Speaking at the Financial Planning Association of Australia (FPA) Professional Congress on Friday, ASIC senior executive leader, financial advisers, Louise Macaulay, warned that such payments were likely to be “conflicted”.
“We’ve received information on property developers offering commissions to advisers to recommend investing in their property developments
“This is likely to be conflicted remuneration if the advisers receive this… we’ve followed this up in instances we’ve become aware of it, and we haven’t as yet uncovered any evidence that payments have actually been made, but it’s something we’re looking at.”
Macaulay also flagged the regulator’s concerns over unlicensed advice being provided by real estate agents in the SMSF sector.
She was very concerned over agents providing advice outside of their skillset and qualifications…especially relating to property acquisitions within a SMSF.
“You don’t need an AFSL (Australian Financial Services Licence) to provide advice in relation to property buying, but when you’re saying it should be bought in a superannuation fund, then you cross the line and you fall into the regulatory regime”.
“We took action recently in the Supreme Court of NSW in relation to a group of entities called Park Trent, and they were promoting the use of SMSFs to buy property.
“We haven’t got final orders, but we’ve got a judgement that says this was unlicensed conduct, and we will be leveraging that to get the message out to the industry.”
At PPI Advice we are huge advocates for those in the property industry gaining a better understanding of what they can and cant say. We see in the real estate industry many uneducated agents making throw away comments to buyers that overstep the mark of what they can say. Its more concerning, however that this industry continues to reward those companies who guise themselves as independent advisors (especially financial planners in property) getting paid hidden commissions to underhandedly sell new property (in all form), from developers to their clients. This has to stop and we believe in educating the market to avoid this from happening to unsuspecting buyers.
They are the victims, as their new investment purchases will take years to even stack up to their inflated purchase price!