Property investment advice needs to be regulated: PIPA
Self-managed super funds' (SMSFs') appetite for property continues to grow, but the lack of any minimum professional standards for property investment advisers requires serious consideration from the regulator, according to Property Investment Professionals of Australia (PIPA).
With other financial services professions such as financial planning and accounting requiring a minimum certification to practice, PIPA chairman Ben Kingsley has called for providers of property investment advice to obtain a minimum diploma-level degree before engaging in advice.
He said the need for the Australian Securities and Investments Commission to take action is particularly pertinent as concerns mount for investors who are being encouraged to set up SMSFs as vehicles for investing in property.
PIPA has made attempts to have formal discussions with the regulator on this matter for the last 12 to 18 months, and has encouraged conversations with Minister for Financial Services Bill Shorten - but with no success to date, Kingsley added.
"I think the most important thing is that the professionals giving advice need to be competent enough to have the technical ability to provide insights, research and recommendations that provide autonomy from their own knowledge source," he said.
In relation to the diploma offered by PIPA, Kingsley said the association has its own recognised prior learning committee that assesses the experience and skills of an adviser and determines whether additional education is required to obtain the property adviser certification.
He said he wanted to see the property investment advisory industry mature - given its breadth - and to avoid the repeat of catastrophic events like Storm Financial and WestPoint.
"The property investment industry involves linked-in professionals such as tax agents, financial planners, mortgage brokers and solicitors, all of whom are involved in the transaction and should all be providing their scope of advice," Kingsley said.
"The problem is that the most important advice is around whether property is going to make a good investment or not - and there is no regulation in place."
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