Real estate agents and mortgage brokers must have SMSF licence: SPAA

The peak body for professionals that provide advice on the fast expanding self-managed super fund sector (SMSF) is urging that real estate agents who recommend these investments and mortgage brokers who arrange financing for them be required to hold a licence.

It follows a growing number of cases and complaints against so-called “spruikers” targeted at unwary investors through free introductory lunches as well as ASIC clamping down on unscrupulous operators that don’t disclose the risks of such investments.

SMSF Professionals' Association of Australia (SPAA) chief executive Andrea Slattery, has told the Australian Financial Review it wants Treasury to licence mortgage brokers and real estate agents that provide advice in this area.

SPAA offers its own SMSF adviser and SMSF auditor accreditations.

Mortgage brokers and real estate agents are not a big chunk of the SPAA membership, which counts accountants, auditors, financial planners, lawyers, risk providers, actuaries, administrators and educators among its members.

She says there has been talk of greater regulation of those who provide SMSF advice, but little action to date.

In February ASIC said it was considering increasing its powers to include oversight of property investments schemes recommended to self-managed super funds, but nothing formal has been proposed to date.

In April, it released a report on the quality of advice in the sector and ways to improve it.

ASIC found that while most advice provided was rated as adequate there were pockets of poor advice.

ASIC found issues in the following areas: 

  • advice was not sufficiently tailored to the needs of the investor
  • replacement product disclosure was absent or inadequate
  • insurance recommendations were absent or inadequate
  • an inappropriate single asset class was provided to investors
  • suitable alternatives to an SMSF were not considered, and
  • there was inadequate consideration of the investor’s long-term retirement planning objectives.

APRA superannuation figures to the end of March show that SMSF assets increased from $473.9 billion to $496.2 billion for a $22.3 billion or 4.7% gain over the quarter with sector accounting for almost a third (31.5%) of the total $1.58 trillion superannuation pool.

According to SPAA research, more than three quarters of SMSF trustees buy assets such as property and shares directly rather than through a managed fund.

In May, ASIC cancelled the credit licence of Money Choice and banned its director, Matthew George, after an investigation found failures to comply with credit laws, responsible lending shortfalls and instances of unlicensed self-managed superannuation fund (SMSF) advice.

In April, it was revealed that four Melbourne businesses running seminars on investing in real estate through SMSFs are being investigated by ASIC over the potentially misleading nature of flyers, advertisements and online ads promoting these seminars.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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