Following a recent Supreme Court of NSW decision against Park Trent Properties Group Pty Ltd (Park Trent) ASIC has written to the REIA regarding advice real estate agents give particularly as it relates to SMSFs.

Following proceedings launched by ASIC, the Supreme Court of NSW found Park Trent had been unlawfully carrying on a financial services business for over five years by providing advice to clients to purchase investment properties through an SMSF.

In handing down his judgment, his Honour Acting Justice Sackville, said that his decision “serves as a warning to others who conduct or propose to conduct businesses which seek to influence clients to establish SMSFs for investment purposes, without having the necessary licence to do so.”

ASIC's message is that anyone recommending a SMSF as a way of investing in property will need to have an Australian Financial Services (AFS) licence, or be authorised by an AFS licensee, and provide appropriate advice that is in the client's best interests.

Property investment advisers or real estate agents who recommend people invest in property via SMSFs, and who do not have an AFS licence, are breaking the law and are subject to fines up to $36,000 or imprisonment for two years or both in the case of an individual or up to $180,000 in the case of a company.

REIA is currently in discussions with a national accounting body regarding the provision of a course relevant to property that meets ASIC requirements. On successful completion of the course participants will receive a Diploma of Financial Planning. The course is expected to be conducted over eight days across a two month period, include online and workshops components and be available in major cities.