Investors warned about kickbacks to finance professionals
Some mortgage brokers, accountants and financial planners may be receiving a commission for recommending properties to investors, a Brisbane-based buyer’s agent has warned.
Simon Pressley from Propertyology said increasing numbers of professionals were marketing properties and receiving payment for sales, despite holding no real estate licence.
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“Currently, there is no law in this country which prevents people such as mortgage brokers, accountants, and financial planners from profiting out of persuading consumers to purchase a property from a product list, even though they have no qualifications or skills whatsoever in this field,” Mr Pressley said.
Generally, the client receives no indication that their adviser stands to benefit from the recommendation, he warned.
He also suggested these properties often have little investment potential.
“An accountant is no more qualified to determine whether property ‘x’ is a good investment than a real estate agent is qualified to give tax advice,” he said.
“Mortgage brokers and financial planners are not property investment advisors.”
In his view, these professionals may be taking advantage of their pre-existing relationship of trust with their client.
“Let’s face it, in many cases it wouldn’t be too hard for them to persuade someone to buy one of the properties on their product list because the relationship and a sense of trust is already established as a result of their core business as a specialist in home loans, tax, or managed funds,” he said.
He believes the government is doing too little to regulate this behaviour.
“Amongst other things, I’ve personally met separately with senior officials of the federal government’s financial services ‘police’ (AKA ASIC) and the Queensland state government’s attorney-general’s office,” he said.
“Responses that I have received range from ‘we can’t intervene because property isn’t considered a financial instrument’, to ‘we must be careful not to deprive people of earning a living’, and ‘we are looking in to it’.”
He urged advisers in the financial sector to be more transparent about their motives.
“If they want to sell real estate, go for it. Get the licence and put the sign out the front. But present yourself for what you are – someone selling property – not a property guru who very conveniently happens to have a list of the best investment properties out of the 9.3 million in Australia,” he said.
