Real Estate Agents should not recommend property investment in an SMSF: ASIC

There’s a growing trend for Australians to take control of their financial futures by setting up Self Managed Superannuation Funds. The industry has grown and SMSF’s control over $505 million in assets.

You don’t have to look far and everyone seems to be giving advice on this sectorand this has the Australian Securities and Investments Commission (ASIC) concerned.

In a letter to the Real Estate Institute of Australia (REIA) and its state affiliates, ASIC says agents recommending purchasers buy property in their SMSF are in breach of the Corporations Act 2001 and subject to penalties.

ASIC is concerned that with the increased popularity of SMSFs and property investment, real estate agents may not realise they are providing financial product advice and need an Australian financial services (AFS) licence when making recommendations or statements of opinion to a person to use an SMSF to invest in property. If providing this advice, agents must ensure they comply with legal obligations under the Corporations Act 2001.

ASIC’s letters to the REIA and the real estate bodies warn that:

  • If a person does not hold an AFS licence or is not authorised by an AFS licensee, they can only provide factual information to consumers in relation to SMSFs.
  • Where an AFS licence is required, real estate agents must immediately cease offering and providing financial services or advertising the provision of financial services until such time as an AFS licence is obtained or they become a representative of an AFS licence holder.
  • A person convicted of carrying on an unlicensed financial services business may be subject to a fine of up to $34,000 or imprisonment for 2 years or both. If a company is convicted it may also be liable to penalties, including a fine of up to $170,000.

ASIC Commissioner Greg Tanzer said ASIC’s role in relation to SMSFs is to regulate the gatekeepers – the advice providers, SMSF auditors, and providers of products and services to SMSFs. [sam id=31 codes=’true’]

‘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 its obligations’, Mr Tanzer said.

ASIC 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 or benefits may be conflicted remuneration and financial advisers may be banned from receiving them under the Future of Financial Advice (FOFA) reforms. This is because the commissions or benefits could reasonably be expected to influence the financial product advice given to retail clients.

The bottom line is choose your advisers carefully. Make sure they are appropriately qualified and that they are advisers and not sales people. Now sometimes that’s a difficult distinction.



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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit

'Real Estate Agents should not recommend property investment in an SMSF: ASIC' have 1 comment


    September 3, 2014 free psn accounts

    great insight. Really enjoyed looking over this blog.
    Keep up the good work and to everyone keep on learning!


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