Whilst property spruikers are allowed to continue spruiking property investment advice without being regulated, Australian investors will continue to be ripped off and events such as Storm Financial and WestPoint will continue to be repeated.
In particular the recent changes in Self Managed Super Funds, which allow the purchase of property investments inside the fund, has opened the flood gates for ‘rogue’ property advisors and property spruikers to suggest a client start a Self Managed Super Fund, get the bank to lend the money to the Fund and then sell one of their properties to the client.
All this without any regulated formal qualifications or code of practice to ensure a property investor is protected from rogue property advisors and property spruikers.
Unlike the highly regulated provisions imposed on accountants and financial planners, it just doesn’t make sense for the Federal Government to continue to ignore this irregularity and allow property investors to continue being targeted and not be protected.
To act in the best interests of property investors, the Federal Government needs to oppose the current licensing and education loopholes which allows rogue property advisors and property spruikers to advise on property investments without adequate education, particularly in the Self Managed Super Fund industry.
Property investment advisors should be qualified and licensed to give advice, and to service the best interests of the client.
Just like accountants and financial planners, property investment advisors should also be subject to penalties if they continue to advise without the required qualifications.
The penalties should be severe, ranging from an industry ban to monetary penalties, and even criminal charges and custodial sentences for serious and serial offenders.
Currently, there are no regulations in place for the provision of property investment advice. Property investors, especially those being advised to set up a Self Managed Super Fund by property advisors and property spruikers operating under similar business models to Storm Financial and WestPoint, should at the very least consult an Accountant or Financial Planner who has a fiduciary responsibility to ensure that investing in property or setting up a Self Managed Super Fund to invest in property is feasible for and your individual circumstances.
Paul Baggetta, Founding Partner of Baggetta & Co, has been a Taxation Accountant for over 31 years, a qualified Financial Planner since 1999 and in 1983 qualified as a Real Estate Licensee and holder of a Triennial Certificate.
If you have any questions please don’t hesitate to contact us.
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