The association said that while it agrees with calls to ASIC for tighter education regulation in the property space, provisions also need to be in place for financial planners and accountants to be qualified as property advisers.
“We’re calling on anyone who is basically saying they want to give education advice and property investment advice, to be suitably qualified,” PIPA chairman and founding director of Empower Wealth Advisory Ben Kingsley told InvestorDaily.
“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.
“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.
Mr Kingsley said PIPA has also been advocating to ASIC and to Government to bring property investment into a regulatory framework.
But he acknowledges that implementation of this regulatory framework will not be easy.
“In principle it sounds easy but the fundamentals aren’t. People buy property for personal use as much as they buy for investment, so I think there will be some challenges in getting the adequate regulatory framework in place. But that shouldn’t stop us,” Mr Kingsley said.
On Tuesday, Chan & Naylor 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.
Currently anyone can promote SMSFs to potential investors, with rogue advisers failing to alert common pitfalls.
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.
