It’s financial product advice, not property, that worries ASIC

ASIC commissioner Greg Tanzer says ASIC has “no particular problem” with SMSFs investing in real property but it is concerned that advice to invest in property is being improperly provided to trustees.

“People provide a financial service if they provide financial product advice,” Tanzer told the 2014 SPAA SMSF National Conference in Brisbane. Financial product advice requires the provider to be properly licensed, and therefore regulated by ASIC.

“Providing financial product advice includes making a recommendation or a statement of opinion to a person to set up an SMSF, or to use an existing SMSF, to purchase a property through that SMSF,” Tanzer said.

“That is because the vehicle through which the investment is being made is a superannuation product, and a superannuation product is a financial product.

“It doesn’t matter that the underlying investment

is real property. It doesn’t matter that the underlying investment is diamonds or artwork or foreign wine or anything else. It’s the fact that the advice is about using your superannuation in a particular way, or establishing an SMSF to invest in a particular way, that makes it financial product advice.

“We’re particularly concerned here that the SMSF sector does not become the target for property spruiking. We’ve got no particular problem with SMSFs making informed decisions to invest in real property. That’s not the issue. But we do not want the SMSF sector to become the target of property spruikers.”