11 October 2024
Managed accounts? Simple.
For advisers and their clients, are managed accounts simply a better way to invest? Read more to find out why managed accounts have become so popular with investors and advisers. Read more
As seen in the Australian Financial Review August 12, 2015
Real estate agents who encourage people to set up a self-managed super fund so they can borrow to buy investment properties are expected to face increased scrutiny for breaking the law.
NSW senator John Williams said he planned to press the issue in a meeting with the Australia Securities and Investments Commission on Friday.
“I will be quizzing them on what they are doing about those real estate agents that are out there advertising on radio and in print encouraging working Australians to withdraw their super and put it into an self-managed fund to buy property,” he told Fairfax Media.
“This practice is wrong. Real estate agents are not financial planners. They are not licensed to provide advice. They have no right to be doing this.”
Mr Williams is a member of the parliamentary joint committee into corporations and financial services, which has oversight of ASIC.
With house and apartment prices in capital cities at record highs and interest rates at record lows, it has never been more tempting to borrow against super to buy property. But gearing into property increases risks that can be triggered by a rise in interest rates, a downturn in the property market, or higher rental vacancy rates.
Mr Williams said the problem had been brought to his attention by an AMP financial planner on the Gold Coast who was alarmed by a rise in the practice and challenged him about what the government was going to do about it.
Other financial planners said they were also worried a rise in the practice of property spruikers tag teaming with accountants to roll would-be property investors into an SMSF so they could take on more debt. The rise in the practice poses a growing risk to individuals and the system itself.
“It is a loophole that direct property is the only asset class where people are legally allowed to provide advice to potential investors without a licence. This can be particularly problematic when the investor is using the money in their superannuation, which is supposed to be a conservative vehicle to fund retirement benefits,” said Andrew McKie, chief executive of Brisbane’s Elston Private Wealth, which advises about 1000 SMSFs.
“We would like to see the regulators tighten up the licensing regime and increase their supervision of those advising investors to buy property through their super fund.”
Spiro Paule, the boss of Findex Group, which advises about 10,000 SMSFs also supports a crackdown.
“It is a growing problem that more real estate groups are pumping people into SMSFs to gear up. People don’t need to meet any qualifications to become the trustee of their own super fund so I do think we need to do more to protect the public.”
ASIC commissioner Greg Tanzer has previously flagged, in 2013 and 2014, that he was reviewing the problem.
Last week, ASIC launched legal action in the Federal Court against Jamie McIntyre who runs 21st Century Group, seeking to put the property and finance group out of business. The action followed an investigation by Fairfax Media that revealed the McIntyre brothers and the sister of notorious property spruiker Henry Kaye were behind a land banking scheme in Bendigo that went bust last month.
