The corporate watchdog has warned real estate agents they might be breaking the law by advising self-funded retirees to invest in property.
The Australian Securities and Investments Commission says real estate agents need to be properly licensed to offer financial advice to investors hoping to take advantage of rising property prices.
ASIC is working with the Real Estate Institute of Australia (REIA) as part of a campaign to ensure agents understand their legal obligations on self-managed super funds, which have become increasingly popular in recent years.
The regulator’s ramped up scrutiny of the real estate sector comes amid complaints that self-funded retirees are being targetted by unscrupulous operators, including property spruikers.
The regulator is also concerned that some agents are offering illegal commissions to financial advisors to steer self-funded retirees in their direction.
ASIC says such commissions may be “conflicted remuneration”, and that financial advisers are prevented from receiving them under the Future of Financial Advice (FOFA) reforms.
“This is because the commissions or benefits could reasonably be expected to influence the financial product advice given to retail clients,” Mr Tanzer said.
ASIC commissioner Greg Tanzer says every real estate agent in Australia will be contacted to remind them of their obligations under the Corporations Act.
“We want to ensure the SMSF sector remains healthy and vibrant so investors can be confident that, if they are receiving advice about investing through an SMSF, their adviser holds an Australian financial services licence and is aware of its obligations,” Mr Tanzer said.
ASIC says real estate agents breaking the law face a fine of up to $34,000, two years imprisonment, or both.