ASIC reiterates SMSF property warning
The Australian Securities and Investments Commission (ASIC) has issued a letter to the Property Investment Professionals of Australia (PIPA) and the Real Estate Institute of Australia (REIA) confirming its increased focus on self-managed funds (SMSFs) investing in property.
ASIC said the aim of the letter was to “ensure real estate agents understand their legal obligations”.
The letter also highlights the dangers of unlicensed financial services businesses.
“ASIC is aware there has been a sharp rise in promoters recommending investors either set up or use an existing self-managed superannuation fund to invest in real property. These promoters may not be complying with the law,” it said.
ASIC’s letter to the industry associations also warned that anyone giving advice around SMSFs needs to hold an Australian financial services licence (AFSL).
“Providing financial product advice includes making a recommendation or statement of opinion to a person to set up an SMSF or use an existing SMSF to purchase real property through that SMSF,” the letter reads. “This is because the vehicle through which the underlying investment is made is an SMSF and an interest in an SMSF is a financial product.
“ASIC is concerned that, with the increased popularity of SMSFs and property investment, real estate agents may not realise they may be carrying on a business of providing financial product advice and may need an AFSL when making recommendations or statements of opinion to a person to use an SMSF to invest in property.
“If a person does not hold an AFSL or is not authorised by an Australian financial services licensee, they can only provide factual information to consumers in relation to SMSFs.”