Of the 469 respondents, 38.8 per cent felt no regulation is necessary while 61.2 per cent said they believe it should be regulated.
Speaking to SMSF Adviser, Property Investment Professionals of Australia (PIPA) chair Ben Kingsley said industry is reluctant to support the regulation of property investment advice due to its hesitancy to take on more compliance.
Mr Kingsley said the regulation of property investment advice would also discourage those who rely on commissions from kickbacks.
“In my reading of those numbers it is my view that, with so much compliance and regulation, there is no doubt that many people on the front line are getting frustrated by the amount of paperwork that needs to be done and they know what is involved when you do bring in regulation,” he said.
“A lot of people will be thinking that if it’s unregulated, it’s just one area where they don’t have to do all that paperwork.
“The other reason is because there are people who make easy money on commissions and kickbacks and to remove that easy stream of referrals and income would obviously worry them.”
Where Group director, mortgage broker and buyer’s agent Todd Hunter said the regulation of property investment has multiple benefits.
“It will take away two-tier marketing, it will take away the marketeers that are out there, it will make it a lot more difficult for hidden kickbacks and referral fees that are not disclosed and put a lot more transparency into the industry,” Mr Hunter said.
“I can’t advise you to buy a one cent share, but I can advise you to buy a $1 million property,” he said. “In what world does that make sense?”
“Property investment advice should definitely be regulated,” Mr Hunter added.
Real estate ageants have ALWAYS acted for the vendor never the purchaser.
When I ask financial planners ‘when you bought your first home or indeed any subsequent home -did you seek independant advice?” I am met with silence
The client’s best interests needs to be the key criteria for the assessment of what needs to be done to support the success of property investors.
Many are risking their financial futures with real estate agents whose vested interests are with their vendors, that are using exaggeration in their investment claims to puff up the appeal of the location, and are fat on the profits of their pressured sales techniques. Government pension budgets are at risk as failure by these investors puts them back onto Government benefits for their final years.
Can we afford to be complacent?
Terry, I agree. Firstly, I’ll disclose that I work in property with advisers. The article highlights valid concerns but I don’t share Mr Hunter’s view that regulation will do any of the things he purports (hopes) it would.
Financial services regulation hasn’t worked so why beat property with the same broken bat? (Property is, of course, not an unregulated wilderness. Each State has its own substantial Acts so the actual call is for more regulation.)
I submit that regulation has failed and even worsened loss through the complexity and obfuscation of compliance, and readily masks wrongdoing. The media provides almost daily examples. Regulation also lulls consumers into a false sense of security and dulls their responsibility to critically assess decisions.
Why is it that Dr Einstein’s definition of insanity is well accepted – except when it comes to regulation? In what world does that make sense? Surely not the real one.
Maybe my location gives me higher exposure to the problems associated with property pushers. Multiple loans with different banks-why- because they are not able to get loans via normal channels. no interest in the client-just greed. When interest rates rise and /or rents decrease- watch the fallout. Regulation is the ONLY way to safe guard the clients so its time for all to wake up to this fact or there may be a large number of small storm occurrences.
Maybe the lack of sense is in the massive over-regulation in the first place. Whatever happened to the old view that people are adults? If you do things such as driving which may kill you, why shouldn’t you be able to decide how to invest your money and choose such advisers as you wish? The law and its administration should concentrate on punishing fraudsters, not regulating honest people and imposing paperwork burdens on all and sundry.
Mr Hunter’s comments are spot on. As I am an adviser if I advise you to invest $100 in a share portfolio I am required to do a Statement of Advice, a full fact find to ensure I have all your details and an analysis of your feelings towards risk. I then have to weigh the investment against your goals to ensure this investment will assist you in achieving those goals. Yet you can go to any RE Agent and purchase a property for investment and no such investigation or consideration has to be given. If you go bankrupt due to this you have no recourse either. How is that protecting the public? I attended a so called investment seminar and not once was there any mention of the risks involved in property purchase, not once was there any consideration to if it would be suitable to your needs. This industry definitely needs t be regulated.