Real estate firm ‘permanently restrained’ from SMSF ‘advice’

The Supreme Court of NSW has issued orders permanently restraining the Park Trent Properties Group from encouraging clients to set up self-managed superannuation funds (SMSFs) to buy property.

The orders came after an investigation by the Australian Securities and Investments Commission (ASIC) found that the property group had been offering advice on SMSFs without an Australian Financial Services Licence (AFSL), in contravention of the Superannuation Investment (Supervision) Act 1993 (SIS Act).

Park Trent had been running seminars and ‘home visits' where its employees recommended and facilitated the establishment of SMSFs by clients, the transfer of clients' super accounts and the completion of the purchase of investment properties through the SMSFs, without an AFSL since March 2010.

The court issued the following orders against Park Trent:

• "Order pursuant to s 1101B(1) of the Corporations Act, that Park Trent be permanently restrained, by itself, its servants or agents or otherwise, from the following conduct:
• "Making recommendations or stating opinions to persons attending seminars or other meetings or presentations conducted or arranged by Park Trent that they should establish their own SMSF in order to invest in real property, transfer the whole or part of their current superannuation accounts or balances to the newly established SMSF or invest in real property through their own SMSF;
• "Making recommendations or stating opinions as to the matters referred to in (a) to persons (clients) who attend or participate in home visits, run meetings or other meetings conducted or arranged by Park Trent, whether such recommendations are made or opinions are stated by employees or persons contracted to Park Trent or employees or persons contracted to other companies within the Park Trent Group;
• "Making recommendations or stating opinions as to the matters referred to in (a) by presenting or making available to clients, whether at meetings or otherwise, PIAs or other similar documents incorporating projections as to financial returns achievable by investing in real property, when the projections are prepared on the basis that the clients will establish or use an SMSF to invest in real property; or
• "Making recommendations or stating opinions as to the matters referred to in (a) by facilitating or otherwise assisting in the establishment of an SMSF by clients or the transfer of clients' superannuation accounts or balances to an SMSF, unless and until Park Trent obtains an AFSL within the meaning of s 911A(1) of the Corporations Act.
• "Order that within a period of seven days from the date of these Orders, Park Trent post a notice in the form of Schedule A to these Orders on the website www.parktrent.com.au and leave the notice in place for a period of 90 days from the date the notice is posted.
• "Order that Park Trent pay the costs of the Plaintiff (ASIC) of the proceedings."

ASIC senior executive leader, financial advisers, Louise Macaulay, raised the case at the Financial Planning Association of Australia (FPA) Professionals Congress earlier this month, noting that: "You don't need an AFSL to provide advice in relation to property buying, but when you're saying it should be bought in a superannuation fund, then you cross the line and you fall into the regulatory regime."

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