In the wake of the COVID-19 pandemic, real estate agents and property managers have been inundated with requests from tenants to reduce or waive rent for a period of time.
We understand real estate agents and landlords may be reluctant to agree to such a request and in some instances, may have made suggestions to tenants that they should access their super to enable them to continue paying rent.
Earlier this month, ASIC issued an open letter to all real estate agents stating the following:-
- Advising a tenant (or any other person) to access their super to pay rent or any other debt may constitute financial advice.
- Real Estate Agents are not licensed to provide financial advice and it will be a breach of Chapter 7 of the Corporations Act if they provide such advice.
- ASIC will monitor this closely and may impose significant penalties on a person providing financial advice without a licence.
Here is a brief summary of Chapter 7 of the Corporation Act: –
- Chapter 7 deals with providing financial services to clients.
- Any person conducting a “financial service business” requires a licence. Providing financial services can include making a recommendation to influence a person to make a decision about a financial product. For example, making a recommendation to a person that they should access their super to be able to continue paying rent.
- The holder of a financial service licence is obligated to provide fair financial advice. There is a duty to act in the best interest of the person to whom the advice is given.
- By suggesting to a tenant to access their super to pay rent, this can be deemed as giving financial product advice. Such a suggestion may not have taken into account all considerations and potential financial repercussions it can have if a party accesses their super.
Individuals who provide such advice without a licence may be fined up to $136,000.00 and face imprisonment for 5 years. Corporations who provide such advice without a licence can be fined up to $1,260,000.00.
In addition to hefty fines and potential imprisonment, real estate agents providing such advice can also expose themselves to civil claims for damages from a client who has relied on the advice to access his/her super fund.
How can Attwood Marshall Lawyers help?
As an essential business unaffected by the lock-down directives, we remain open for business. We continue to provide our legal services to the same exceptional standards. Our offices are located at Kingscliff, Coolangatta, Robina Town Centre and Brisbane. Our 24/7 phone line is: 1800 621 071.