Speaking to SMSF Adviser, chief executive of JBS Financial Strategists Jenny Brown said the FSI Report’s suggestion to ban limited recourse borrowing arrangements (LBRAs) in SMSFs is a good thing for the industry as it will reduce the number of property spruikers.
“Property spruiking has been really detrimental to our industry and could potentially blow up if the property sector continues to give incorrect advice to set up SMSFs,” said Ms Brown.
Ms Brown argued that the use of LBRAs for the purchase of commercial property for business owners should be retained however.
“For business owners buying the business premises they are working out of, I think it’s a great strategy and should be allowed,” said Ms Brown.
She also argued the government should be looking at imposing greater regulation on the property sector in line with what financial advisers comply with.
“I’d like to see property spruikers having the same regulations as we do as financial advisers; the [property sector] needs to be a lot more highly regulated and I think that’s what’s causing our issues,” she said.
Ms Brown said she’d like to see regulation around the qualifications and rules required to sell property.
“I don’t see why someone can sell a million-dollar property when all they have is a real estate’s licence whereas an adviser putting together a million-dollar portfolio must go through the full compliance, know the client, know the product, get everything signed off, put together a full financial plan and do regular reviews,” said Ms Brown.
The real estate side of the sector Ms Brown said was currently the biggest issue facing the financial services industry.
“Clean that part of the industry up and I think we’re in really good shape,” said Ms Brown.