Regulation of property investment advice is one solution to protect consumers against “spruikers and unscrupulous operators” in the self-managed super fund (SMSF) sector, according to the Property Investment Professionals of Australia (PIPA).
There is “no doubt” that property spruikers have become more active in encouraging investors to set up an SMSF for the purpose of buying property Ben Kingsley, chair of PIPA, told SMSF Adviser.
“Unfortunately, real estate agents [and] mortgage brokers who aren’t qualified or licensed to give advice regarding SMSFs are jumping into this space when they shouldn’t be,” he added.
There are also concerns that those who are licensed to give advice do not have the adequate knowledge and education to provide sound advice for their clients, with Mr Kingsley drawing attention to financial planners.
Where the purpose of a purchase is for investment, PIPA advocates regulation around the advice provided to consumers in that space, with practitioners having to meet a minimum standard of education and receive ongoing professional development.
“They wouldn’t just have to put on a suit and promote a property when they really have no idea what they’re doing and receive substantial commissions for doing so,” Mr Kingsley said.
“It’s such a high value transaction it’s not like buying $10,000 worth of shares ... households are in some cases taking big gambles as opposed to really understanding the consequences of a poor investment.
“Our goal is to keep working with the government and lobbying them intensively ... people are potentially risking too much of their SMSF in one asset class and missing out on the critical understanding of diversification, so it’s important that we see regulation come into this space.”
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