Real estate agents will likely be forced to stop recommending people use self-managed super fund
s (SMSF) to buy property unless they are licensed to do so according to one financial expert.
Last week, New South Wales Nationals Senator John Williams said he has serious concerns about real estate agents providing SMSF advice and that he wanted to see the Australian Securities & Investment Commission take action on the issue.
"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,” Williams told Fairfax Media outlets.
"I will be quizzing them [ASIC] 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 a self-managed fund to buy property," he said.
David Shaw, director at accounting and financial advice firm WSC Group, said he agreed with Williams’ calls for increased regulation of the SMSF area.
“It’s definitely an issue and right now there’s a real grey area there about who can give advice and what type of advice they can give,” Shaw said.
“It’s very dangerous as well to recommend people set up a self-managed account or use it to buy property if you don’t know the full aspect of their financial situation.”
From July next year, Shaw and all other accountants will be required to hold an Australian financial services license if they wish to provide SMSF advice and he believes real estate agents will eventually face similar restrictions.
“From July 1 2016 any accountant wanting to give advice on an area like SMSF will have to RG146 compliant and licensed and I think that sort of thing will eventually apply to people like real estate agents.
“I think the change for accountants is just the start of a broader range of changes limiting the advice people can give if they aren’t licensed and I think that’s a step forward.”
In the case of WSC Group, Shaw said the firm had already taken their own steps to ensure they were providing the right advice to people enquiring about SMSFs.
“Even though the current exemption means accountants can provide SMSF advice, if somebody ask us about it we refer them straight to one of our qualified financial planners.
“There’s a lot that goes into assessing whether somebody should be setting up an SMSF or if they should be using one to buy property and it’s definitely something that a financial planner with the sufficient knowledge should be doing."
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