The Australian Securities and Investments 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 [Australian Financial Services] 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,” ASIC’s letter stated.
In its letter, ASIC also warned that persons 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 stated.
“We want to ensure the SMSF sector remains healthy and vibrant so investors can be confident that, if they are receiving advice about investing through an SMSF, their adviser holds an Australian Financial Services Licence and is aware of [their] obligations,” ASIC Commissioner Greg Tanzer said.
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