The corporate regulator has warned the real estate industry on the licensing obligations of agents involved in SMSF property investments.
The Australian Securities and Investment Commission (ASIC) yesterday announced it is working with the Real Estate Institute of Australia (REIA) to ensure real estate agents understand their legal obligations when dealing with SMSFs.
ASIC has written to the REIA, the state and territory real estate institutes and property investment associations outlining its concerns and requesting the real estate bodies pass these on to members.
“Real estate agents may not realise that they may be carrying on a business of providing financial product advice and may need an AFS licence, or authorisation under an AFS licence, when making recommendations or statements of opinion to a person to use an SMSF to invest in property,” the letter stated.
In its letter, ASIC also warned person convicted of carrying on an unlicensed financial services business may be subject to a fine of up to $34,000 or imprisonment for two years, or both.
In addition, ASIC stated it is aware some real estate agents are offering commissions or benefits to financial advisers for recommending that investors use an SMSF to purchase the real estate agents' properties.
Such commissions may be considered conflicted remuneration and financial advisers may be banned from receiving them under the Future of Financial Advice reforms, ASIC said.
Chair of Property Investment Professionals of Australia (PIPA) Ben Kingsley told SMSF Adviser this latest move from ASIC is positive for the SMSF sector.
“The next step is to get in front of the government - this is not just an issue for SMSFs, it's an issue for anyone investing in residential property,” Mr Kingsley said.
PIPA has long argued that the government should legislate for property to be classed as a financial product when the purpose of sale is for investment.
“Every review in the last 10 years has recommended regulation in property, and no government has been willing to bring it on. The Liberal party has given good indication that they are interested in having that conversation,” Mr Kingsley added.
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all