The Australian Government’s financial services regulator has written to the real estate institutes warning that their members could face fines of up to $1.26million if found guilty of providing unlicensed financial product advice.
The action by the Australian Securities & Investments Commission (ASIC) follows the introduction of new early release measures for superannuation as part of the government’s COVID-19 economic response package. The new temporary measures could allow individuals affected by COVID-19 to access up to $10,000 in 2019-20 and a further $10,000 in 2020-21.
In the letter, the corporate watchdog says it is aware that some real estate agents are advising tenants who are behind in rent to consider applying for early release of their superannuation.
“Recent media reports and social media commentary outlining this conduct by some real estate agents is of significant concern to ASIC,” it reads.
According to the letter, ASIC is concerned the conduct by the real estate agents may constitute unlicensed financial advice and may not be in the best interests of the superannuation fund member — both being contraventions of the corporations law.
“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, or are an authorised representative of an Australian Financial Services Licensee.”
The letter states that the Corporations Act 2001 imposes significant penalties for the provision of unlicensed financial advice. Individuals face penalties of up to 5 years imprisonment, and/or a fine of up to $126,000 (600 penalty units), while corporations could receive fines of up to $1.26million.
“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.”
To avoid crossing the line into financial product advice, ASIC encourages real estate agents to refer cash strapped tenants to the information available on the ASIC MoneySmart website (moneysmart.gov.au).