Industry body calls for review into property investment advice

Reports that investors are losing millions of dollars after being cheated by property marketeers selling dubious properties under the guise of ‘independent financial advice’ have dominated headlines in recent weeks.

In particular, concerns are mounting for investors who are being encouraged to set up self-managed super funds (SMSFs) as vehicles for property investment.

Earlier this week, ASIC signalled that the industry regulator will undertake surveillance of financial advisers and accountants based on these SMSF concerns.

PIPA chairman, Ben Kingsley, said concerns surrounding SMSFs and poor or underhanded property investment advice, have once again highlighted the need to regulate the provision of such 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.”

Unlike the areas of financial planning, real estate and mortgage broking, the provision of property investment advice – even in SMSFs – continues to be unregulated – currently anyone can promote property as an investment option.

“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.

Despite the lack of a regulatory framework around property investment advice, there are qualified professionals who meet 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.