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Court finds property spruiker gave unlawful advice
The Supreme Court of NSW has found a property group unlawfully carried on a financial services business by providing advice to clients to purchase investment properties through an SMSF.
Park Trent Properties Group was found to have been unlawfully carrying on a financial services business for over five years.
In his judgement, Acting Justice Sackville said it was in the public interest that Park Trent be restrained from carrying on a financial services business.
ASIC first launched legal proceedings in November 2014 against Park Trent.
By the time of the trail in June 2015, Park Trent had advised more than 860 members of the public to establish and switch funds into an SMSF.
In a public announcement, ASIC said the Supreme Court observed Park Trent’s business model depended on "persuading relatively unsophisticated investors of the virtues of using their superannuation accounts to purchase investment properties and to establish SMSFs”.
“Investors were influenced to make important decisions concerning their superannuation strategy with little or no genuine consideration of whether the decision took proper account of their individual financial circumstances. Some suffered financial loss as a consequence,” Acting Justice Sackville said.
The court said the decision “serves as a warning to others who conduct or propose to conduct businesses which seek to influence clients to establish SMSFs for investment purposes, without having the necessary licence to do so”.
ASIC deputy chairman Peter Kell said the outcome demonstrates the courts, ASIC and the public will not tolerate this type of unscrupulous behaviour.
“Property spruikers who recommend people invest in property via SMSFs, or facilitate such an investment, and who do not have an Australian Financial Services Licence are breaking the law,” said Mr Kell.
“ASIC’s message is that anyone recommending or facilitating SMSFs as a way of investing in property will need to have a licence and provide appropriate advice that prioritises the client's interests.”
At an SMSF Association event this morning, Mr Kell said he was pleased with the outcome and suggested it serves as a warning for other unsrupulous operators.
Read more:
‘Shonks’ an ongoing risk to SMSFs, ASIC cautions
BT set to target SMSFs with platform launch
ATO hitting accountants’ productivity: poll
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