Australian Securities and Investments Commission (ASIC) financial enforcement director Tim Mullaly told real estate agents in a letter today that advising tenants to apply for an early release to their superannuation if they are unable to pay rent would face harsh penalties.
Mullaly warned real estate agents that giving unlicensed financial advice to tenants could result in significant fines. Under the Corporations Act, individuals can receive a maximum of five years imprisonment, and/or a fine of up to $126,000, and for corporations a fine of up to $1,260 million dollars.
“ASIC intends to monitor this situation closely, and if contraventions of the licensing requirements of the Corporations Act are found, ASIC will not hesitate to act swiftly to protect vulnerable consumers,” he said.
Mullaly says financial advice must only be provided by qualified and licensed financial advisers, or financial counsellors, not by real estate agents.
“If real estate agents are of the view that they need to give guidance to a tenant regarding their financial affairs, they should consider referring tenants to information available on the ASIC Moneysmart website,” he said.
As part of the Federal Government’s COVID-19 economic response package, the Australian Tax Office (ATO) has announced to allow individuals access their superannuation early, up to $10,000 in 2019-2020 and a further $10,000 in 2020-2021 if they have lost 20 percent or more of work due to COVID-19.
Google Trends says that the search term ‘rent freeze’ has risen 1,500 percent, and the term ‘rent abatement’ has risen 950 percent over March, following an increase in recession anxiety in Australians.
Tim Mullaly said tenants facing financial difficulty need sound financial guidance and potentially debt counselling, while advising tenants to access their superannuation to pay rent would likely be a breach of the law.
Former Prime Minister Paul John Keating described the conduct of real estate agents as “just another clamour for wealth transfer”.
“Superannuation should not be drawn down for rent. Once exhausted – then what?,” he said.
A senate inquiry into the performance of ASIC in 2014 found that the regulatory body was prone to miss or ignore early warning signs of “corporate wrongdoing” or “troubling trends that pose a risk to consumers”.
Photo: By Tierra Mallorca available ‘HERE’ and used under a Creative Commons Attribution. The image has not been modified.