Advisers to be qualified to provide property advice: PIPA
Property Investment Professionals of Australia (PIPA) has called on industry professionals to up-skill and become qualified property investment advisers (QPIAs) as part of the group's campaign to increase the quality of investment advice.
PIPA chair Ben Kingsley said that professionals active within the property investment space should at least become a member of its association so the public can identify them.
"[However,] best practice would be to become formally qualified as a QPIA to give sound property investment advice," he said.
"Australians deserve accurate property investment advice and a directory of appropriately qualified professionals they can trust."
PIPA also plans to ramp up its presence within the public domain and provide its members with a greater 'voice' through increased media and advertising activities, promoting the benefits to consumers of seeking out a qualified professional.
"Those who have the QPIA accreditation can not only claim to be ethical, qualified practitioners; they will have a significant head start when it comes to attracting new enquiries," Mr Kingsley said.
"There are more than 80,000 professionals, employed either directly or indirectly within the property investment industry, giving opinions and advice to consumers. However, our figures indicate that less than one per cent of those are actually formally qualified to offer direct property investment advice," he said.
The move follows PIPA's call to the Australian Securities and Investments Commission (ASIC) and the federal government in November last year to regulate the provision of property investment advice.
"We are going to see an ongoing repeat of events such as Storm Financial and WestPoint - as well as a host of property spruikers like Henry Kaye appearing - if nothing continues to be done about property investment advice regulation," Mr Kingsley said at the time.
"While the federal government continues to sit idle on this, Australian investors will continue to be ripped off."
Unlike the areas of financial planning, real estate and mortgage broking, the provision of property investment advice - even about SMSFs - continues to be unregulated.
In October 2012, Chan & Naylor also called on ASIC to tackle education loopholes in the SMSF industry that allow 'rogue' property advisers and property spruikers to advise on property investment without adequate education.
Under current law, a property spruiker can suggest to an individual that they start an SMSF, get the bank to lend money to the SMSF then buy one of his or her properties.
"[They] don't have to be licensed to say that to you," Chan & Naylor director David Hasib said at the time. "There is no due diligence; no statement of advice; there is nothing. How is the best interest of the client assessed?"
Anyone who wants to promote superannuation, regardless of whether it is an SMSF or not, needs to be authorised under an AFSL, he explained.
"I'm not saying a property spruiker shouldn't do this; I'm saying they need to do it under a governing body which provides a compliance regime and a duty of care to the client," he said.
ASIC should enforce requirements such as a diploma in financial planning, including a sub-competency in SMSFs, increasing continuing professional development hours, and a yearly exam, he added.
In October 2012, Mr Kingsley also told InvestorDaily that while he agrees with the need for tighter regulation, provisions also need to be in place for financial planners and accountants to be qualified as property advisers.
"I can see where the financial planners and accountants are coming from when they say they don't want these property spruikers in the space, and neither does our association," he said.
"But on the other side of the fence is this situation where accountants and financial planners are giving property investment advice without any formal education or qualification."
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