The corporate watchdog has written a letter to Australia’s real estate bodies, expressing its concern over some real estate agents offering unlicensed financial advice to tenants.
Tim Mullaly, ASIC executive director – financial service enforcement, has issued the letter to the real estate institutes in each state, warning that some real estate agents are advising tenants to apply for early release of their superannuation.
“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,” Mr Mullaly said.
“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.
“As you are no doubt aware, as part of the federal government’s COVID-19 economic response package, the Australian Taxation Office (ATO) has announced it will implement a measure to allow individuals affected by COVID-19 to access their superannuation early, up to $10,000 in 2019–2020 and a further $10,000 in 2020–2021.”
Mr Mullaly said the primary concerns ASIC has with agents acting in this regard are 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.
Financial advice must only be provided by qualified and licensed financial advisers, or financial counsellors, not by real estate agents who neither hold the requisite licence, nor are an authorised representative of an Australian financial services licensee,” Mr Mullaly said.
“The Corporations Act imposes significant penalties for a contravention of section 911A. For individuals, this can be a maximum of five years’ imprisonment, and/or a fine of up to $126,000 (600 penalty units); and for corporations, a fine of up to $1,260 million dollars (6,000 penalty units).
“Tenants facing financial difficulty need sound financial guidance and potentially debt counselling. Specifically pointing them to and recommending them to consider the specific possibility of accessing superannuation is, again, likely to amount to a breach of the act.”
In conclusion, the letter noted that ASIC intends to monitor the situation closely and won’t hesitate to crack down on agents should they be found to be providing unlicensed financial advice.
“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,” Mr Mullaly added.
“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.
“If real estate agents are of the view that they need to give guidance to a tenant regarding their financial affairs, they should consider referring tenants to information available on the ASIC Moneysmart website.”