Mortgage brokers, accountants warned on unlicensed advice
Mortgage brokers, accountants and others using property investment software, modelling tools and apps in relation to property owned by clients in trusts, companies or self-managed funds have been warned they may be providing unlicensed advice.
The Property Investors Council of Australia (PICA) has issued the warning referencing “the increasing misuse of property investment software and modelling tools”.
PICA said it was raising the issue as a call for professional caution.
PICA chair, Ben Kingsley issued a statement stating his organisation is “increasingly concerned that software tools and apps modelling property and portfolio performance of trusts, companies or self-managed superannuation (SMSFs) property assets are promoted to and used by these professionals”.
“These same professionals who do not hold an Australian Financial Services Licence (AFSL) or appropriate authorisation are placing both practitioners, their business, and consumers at significant legal risk,” he said.
“Many professionals may be unaware that using these software modelling tools and apps in relation to property owned by clients in trusts, companies or SMSF’s means they are giving financial product advice, under the Corporations Act, which is against the law” Kingsley said.
“Unless you are a financial planner, using any tools that analyse or track the current or future performance of property in these entities for a client, crosses a clear legal boundary, even where the intent is education or illustration.”
Kingsley noted that under the Corporations Act 2001, interests in trusts, companies and SMSFs are classified as financial products. Any advice—whether personal or general—about acquiring property or helping a client manage a portfolio through these structures is therefore regulated financial advice.
PICA notes that:
- Software tools do not remove liability – facilitating advice through modelling platforms is treated the same as giving advice directly.
- “Soft” or implied recommendations can still be financial advice if they influence decision-making – being the client with whom they are working.
- The Corporations Act 2001, interests in trusts, companies and SMSFs are classified as financial products. Any advice-whether personal or general-about acquiring property or helping a client manage a portfolio through these structures is therefore regulated financial advice.
PICA notes that:
- Software tools do not remove liability – facilitating advice through modelling platforms is treated the same as giving advice directly.
- “Soft” or implied recommendations can still be financial advice if they influence decision-making – being the client with whom they are working.
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