Senate inquiry into property spruikers on the cards
A NSW senator is concerned by the “stampeding” of SMSFs into property investment, and intends to launch a Senate inquiry into property investment advisers.
Although the proposal is not yet finalised, Nationals Senator John Williams told Smart Property Investment's sister publication, SMSF Adviser, that the inquiry should, among other things, look into the extent of regulation and oversight of the property investment industry and the extent of investment in this sector through SMSFs.
Further, it should look at the qualifications and accreditation required to provide proper and qualified advice to potential investors, and any scope for tightening these qualifications.
Mr Williams expressed concern about the lack of regulatory oversight for property investment advisers.
“I can go to my hometown tomorrow, hang a sign out the front that says ‘John Williams, property investment adviser’. I don’t need do any study, I don’t need any experience, I don’t need any licence, I have no oversight of me – that is wrong,” Mr Williams said.
“And I bet you if I was to do that, I would advise people to invest in a property that just happens to return me the greatest commission,” he added.
Mr Williams floated the idea of ASIC having regulatory oversight of advisers on property investment.
“ASIC has done a good job when it comes to financial planning regulations here, obviously, and I think they need powers to clamp down on property spruikers,” he said.
The news comes after Supreme Court of NSW this week handed down final orders further to a judgement delivered against Park Trent Properties Group on 15 October.
The court issued a damning verdict against the group, after it was found to have taken advantage of "unsophisticated investors".
Following ASIC action, the court found that Park Trent Properties Group unlawfully carried on a financial services business for more than five years by providing advice to clients to purchase investment properties through an SMSF.
The Wollongong business promotes itself as a “full service real estate company” that offers sales services, property management and investment advice.
ASIC said that Park Trent Properties Group had advised more than 860 consumers to establish and switch funds into an SMSF by the time the trial started in June this year.
In his judgement at the time, acting justice Ronald Sackville said that the group's business model depended on “persuading relatively unsophisticated investors of the virtues of using their superannuation accounts to purchase investment properties and to establish SMSFs”.
“Investors were influenced to make important decisions concerning their superannuation strategy with little or no genuine consideration of whether the decision took proper account of their individual financial circumstances. Some suffered financial loss as a consequence,” he added.
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