Tougher property investment laws needed: FPA

The Financial Planning Association (FPA) is calling for real estate agents to operate under a national regulatory regime that it hopes will help put a stop to investors being burnt by bad, unregulated advice.

The call for change came as the FPA gave evidence at the Parliamentary Joint Commission on Corporations and Financial Services inquiry into Commonwealth Regulation of Property Investment Advice last Friday.

Currently real estate agents are regulated on an individual state-by-state basis. The FPA, along with a host of other organisations who also gave evidence such as the National Institute of Accountants and the Australian College of Financial Services, believe the current regulatory framework is inconsistent between states and does not adequately protect direct property investors.

If the government heeds the association’s advice and makes the recommended changes, real estate agents who recommend investment properties could end up having to fulfill competency prerequisites and offer clients disclosure documents. The FPA has also requested that the proposed national regime include dispute resolution schemes and compensation arrangements for duped investors.

“There is no reason why property investments should not be covered by a national regulatory regime with the positive features of the regime applying to financial product advice,” FPA chief executive Kerrie Kelly said after the hearing.

“Indeed, when one considers that property investments are often much larger than the usual financial investments, there are compelling reasons for it.”