Property Spruikers get Warnings on Consumer Laws
Western Australia, New South Wales and Victoria state governments are sending warning letters to property spruikers warning them they must abide by Australian Consumer Law or could be hit with penalties of up to $1.1 million.
State and territory authorities have been monitoring the activities of 15 property spruikers Australia-wide that typically hold free seminars selling a range of options to invest in property, especially in apartment complexes.
The warnings arrive as consumer advocates raise concerns about the dangers of property spruikers, who employ free seminars to pressure attendants into making unsound purchases, or dispense investment advice of a highly dubious nature.
Victoria’s consumer affairs minister Heidi Victoria said, “The sort of thing that we’re concerned about is, for example, a high-pressure sales environment, so when people come along to a free seminar but then feel obliged to spend money on an education program or that type of thing. We want to make sure that they’re not feeling pressured into signing anything on the night, that they are given plenty of time, but also to understand that those operating in this space must give a 10-day cooling-off period.”
Ms Victoria says she is also concerned about people being talked into using their self-managed super fund to invest in property.
Over a dozen nation-wide organisations were targeted out of a total of around 60 known to authorities, with the Western Australian consumer protection commissioner Anne Driscoll turning to the Supreme Court to stop three businesses engaging in rent-to-buy arrangements. Authorities in Western Australia also managed to compel seminar speaker Rick Otton to agree to cease staging his events in the state.
Brokers should get behind efforts to regulate the investment property sector, according to DomaCom head of sales and marketing Warren Gibson. He has called on the financial services sector – including financial planners, accountants and mortgage brokers – to get behind efforts to regulate the property investment industry. He has urged brokers to join one of the sector’s industry associations, Property Investment Association of Australia or PIPA Property Investment Professionals of Australia.
Mr Gibson said brokers, planners and accountants could drive the “spruiker element” out of the industry, thereby improving public perception of property investment advice.
“If financial planners, accountants and brokers support these bodies and gain the credentials being offered they can increase their client reach extend their revenue potential and bring property into a regulated space. This will help protect their client base and deliver better outcomes.”
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