Supreme Court punishes agency for ‘unscrupulous behaviour’

Supreme Court punishes agency for ‘unscrupulous behaviour’

22 October 2015 by Staff Reporter 0 comments

Real estate businesses have been warned they face serious consequences if they exceed the limits of the advice they can provide.

Following ASIC action, the Supreme Court of NSW found that Park Trent Properties Group unlawfully carried on a financial services business for more than five years by providing advice to clients to purchase investment properties through an SMSF.

The Wollongong business promotes itself as a “full service real estate company” that offers sales services, property management and investment advice.

ASIC said that Park Trent had advised more than 860 consumers to establish and switch funds into an SMSF by the time the trial started in June 2015.

In his judgement, acting justice Ronald Sackville said that Park Trent's business model depended on “persuading relatively unsophisticated investors of the virtues of using their superannuation accounts to purchase investment properties and to establish SMSFs”.

“Investors were influenced to make important decisions concerning their superannuation strategy with little or no genuine consideration of whether the decision took proper account of their individual financial circumstances. Some suffered financial loss as a consequence,” he said.

Acting Justice Sackville said his decision “serves as a warning” to real estate businesses that seek to influence clients to establish SMSFs for investment purposes without having the necessary licence to do so.

ASIC deputy chairman Peter Kell said agencies that engage in such conduct are breaking the law.

“This outcome demonstrates the courts, ASIC and the public will not tolerate this type of unscrupulous behaviour,” he said.

“ASIC’s message is that anyone recommending or facilitating SMSFs as a way of investing in property will need to have a licence and provide appropriate advice that prioritises the client's interests," Mr Kell added.

“It is important that advisers who deal with SMSFs are appropriately licensed because the important safeguards and standards that come with being licensed are in place for a sector which is of growing importance to more Australian investors.”

Park Trent and ASIC have until 29 October to file submissions regarding the form of final orders.

According to Park Trent’s website, the company has 10 offices nationwide and has joint venture operations in China, New Zealand, the UK and the UAE.

[Related: Creditors set to suffer in $19.1m real estate collapse]

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