PIPA chair Ben Kingsley said concerns surrounding self-managed superfunds (SMSFs), and poor or underhanded property investment advice, has highlighted the need to regulate the provision of property investment advice.
"We are going to see an ongoing repeat of events such as Storm Financial and WestPoint - as well as a host of property spruikers like Henry Kaye appearing - if nothing continues to be done about property investment advice regulation," Mr Kingsley said.
"While the Federal Government continues to sit idle on this, Australian investors will continue to be ripped off," he said.
Unlike the areas of financial planning, real estate and mortgage broking, the provision of property investment advice - even in SMSFs - continues to be unregulated.
"It simply doesn't make sense that you need to be formally qualified to give financial planning advice or be formally qualified to be an accountant to provide tax advice, but anybody can provide property investment advice," Mr Kingsley said.
But he explained that despite a lack of regulatory framework around property investment advice, there are qualified property investment professionals that have both the educational and ethical standards to provide quality advice on property.
"Investors must take care that they only take property investment advice from those qualified to give it," he said.
"PIPA members subscribe to a code of practice and adhere to strict qualification requirements investors can trust."
On 23 October Chan & Naylor also called to ASIC to tackle education loopholes in the SMSF industry which allow 'rogue' property advisers and property spruikers to advise on property investment without adequate education.
Under the current law, a property spruiker can suggest an individual to start an SMSF, get the bank to lend money to the SMSF then buy one of his or her properties.
"[They] don't have to be licensed to say that to you. There is no due diligence, no statement of advice, there is nothing. How is the best interest of the client assessed?
"It doesn't fall under one of those licensing regimes. People are absolutely making a mockery of it and taking complete advantage of this opportunity," Mr Hasib told InvestorDaily on Tuesday.
He explained that anyone who wants to promote superannuation, regardless of whether it is an SMSF or not, needs to be authorised under an AFSL.
"I'm not saying a property spruiker shouldn't do this, I'm saying they need to do it under a governing body which provides a compliance regime and a duty of care to the client," he said.
ASIC should enforce requirements such as a diploma in financial planning, including a sub-competency in SMSFs, increasing continuing professional development (CPD) hours, and a yearly exam.
"Penalties should be put in place for those continuing to advise without the required qualifications," Mr Hasib said.
"Penalties should be severe, ranging from an industry ban to monetary penalties or even criminal charges for serial offenders," he said.
But, on 25 October, PIPA chairman and founding director of Empower Wealth Advisory Ben Kingsley also told InvestorDaily that whilst he agrees with the need for tighter regulation in the property space, provisions also need to be in place for financial planners and accountants to be qualified as property advisers.
"I can see where the financial planners and accountants are coming from when they say they don't want these property spruikers in the space, and neither does our association," Mr Kingsley said.
"But on the other side of the fence is this situation where accountants and financial planners are giving property investment advice without any formal education or qualification," he said.
