Real estate bodies have spoken out about ASIC’s recent letter which warned that some real estate agents were offering unlicensed financial advice to tenants.
On Friday, 3 April 2020, the corporate watchdog released a letter it had addressed to real estate institutions in each state which highlighted that some agents are advising tenants to apply for early release of their superannuation amid the COVID-19 pandemic.
“ASIC is aware that some real estate agents are advising tenants who are unable to pay their rent, or who may find themselves in such a situation in future, to consider applying for early release of their superannuation,” wrote executive director – financial service enforcement Tim Mullaly, speaking on behalf of ASIC.
“Recent media reports and social media commentary outlining this conduct by some real estate agents is of significant concern to ASIC and, we would hope, you.”
Mr Mullaly went on to write that such conduct may constitute unlicensed financial advice in contravention of section 911A of the Corporations Act, or not be in the best interests of individuals in contravention of section 961B of the Corporations Act, and warned that ASIC would be taking such conduct seriously.
“We will be raising these concerns with the relevant state regulatory bodies and will be writing directly to firms where it is alleged or brought to our attention that they have breached the law,” he said.
“ASIC intends to monitor this situation closely, and if contraventions of the licensing requirements of the Corporations Act are found, ASIC will not hesitate to act swiftly to protect vulnerable consumers.”
REB reached out to each real estate institution to gauge their perspective of the situation. Here’s what they had to say:
“Agents should not be providing financial advice to anyone as that’s illegal. Financial advice must only be provided by qualified and licensed financial advisers or financial counsellors,” REIA president Adrian Kelly said.
“Agents can give guidance to a tenant as to where information regarding their financial affairs is available such as the ASIC Moneysmart website, as well as to government announcements about assistance in the current crisis.
“Thankfully, [soon] we will receive some government announcements around tenants and property owners which will lay the ground rules so we can start to clean up some of this mess.”
“REISA was very concerned to hear that real estate agents were engaged in this practice,” a spokesperson for the REISA told REB.
“REISA has not as yet received any calls from tenants alleging this behaviour, but as the peak body of real estate in South Australia, we still take this most seriously.
“REISA has trained this information very hard for many years in its professional development and accredited training sessions and hopes that this practice is not occurring in South Australia.
“REISA has forwarded the ASIC correspondence to all its members this morning and will include it in its weekly newsletter.
“REISA encourages all real estate agents to heed the advice and work with tenants in finding solutions that do not contravene legislation.”
“We are aware of recent media reports that some real estate agents have been recommending tenants access their superannuation to pay rent,” REIWA president Damian Collins said.
“While an agent can send tenants a list of government support programs, agents should not be saying that tenants ‘should’ take it out of their super.
“We have sent a statement to all our members together with a copy of the letter from ASIC, strongly recommending that they do not provide unlicensed financial advice.”
“As the peak body for Queensland’s real estate industry, the REIQ take[s] any concerns Australia’s corporate regulator has very seriously and ha[s] issued a warning to our members that any unlicensed financial advice is neither appropriate nor lawful for any real estate agent to be providing,” REIQ CEO Antonia Mercorella said.
“Where it may have happened, I don’t believe it was done with a view to wanting to break the law in any way, but rather an agent was trying to assist a tenant in financial distress as many currently are due to the current crisis.
“However, we make it very clear that any unlicensed financial advice isn’t acceptable at any time from any real estate agent.”
REB reached out to the Real Estate Institute of Victoria (REIV), the Real Estate Institute of Tasmania (REIT) and the Real Estate Institute of the Northern Territory (REINT), however did not receive a response prior to deadline.
REB also reached out to the Real Estate Institute of NSW (REINSW), who was willing to provide comment however due to scheduling conflicts REB was unable to obtain said comment prior to deadline.
Emma Ryan is the deputy head of editorial at Momentum Media.
Emma has worked for Momentum Media since 2015, and has since been responsible for breaking some of the biggest stories in corporate Australia, including across the legal, mortgages, real estate and wealth industries. In addition, Emma has launched several additional sub-brands and events, driven by a passion to deliver quality and timely content to audiences through multiple platforms.
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