![ASIC deputy chairman Peter Kell says the regulator is planning to expose property spruikers and identify shonky ...](/content/dam/images/g/u/e/u/s/n/image.related.afrArticleLead.620x350.gue7um.png/1487242482096.jpg)
Australian Securities and Investments Commission investigators pretending to be investors will pursue property spruikers and identify shonky practices in a planned probe into self-managed super funds, according to deputy chairman Peter Kell.
The regulator said recent court decisions had given it a green light to launch the probe into spruikers, despite it not being responsible for real estate agents or the sale of property.
Increased funding from the federal government will be used to complement ASIC's investigators with outside undercover consultants who will visit financial advisers to seek advice on self-managed super.
"Our particular concern is the quality of financial advice," Mr Kell said.
"Whether it is given in such a way as SMSF investors understand their obligations, requirements and experience needed to make a decision," he said.
It will also focus on whether investors understand costs, additional administration, asset allocation and have enough assets to justify setting up a fund, he said.
There is about $650 billion held in some 580,000 funds, or nearly one-quarter of the nation's $2.3 trillion worth of super assets.
The regulator will review files and written advice of advisers in addition to verbal recommendations made directly to its undercover officers pretending to be clients, he said.
The timing has not been revealed to ensure the quality of research is not compromised. It is expected to national and engage a range of advisers, from sole operators to networks.
ASIC is concerned some unscrupulous property spruikers could persuade gullible investors to set up a fund and use their superannuation assets to buy an investment property despite lack of diversification, high commissions and vulnerability to volatile property markets.
In recent years ASIC has established its authority to monitor and regulate property spruikers even though there is a separate real estate body.
For example, the NSW Supreme Court upheld prosecution of Park Trent Properties Group being barred from offering unauthorised investment recommendations to buy property for SMSFs.
"The resourcing of shadow-shop will be drawn from additional funding the federal government announced in the second half of last year, enabling a broad review that will provide a significant insight into current practices and performance, especially the 'best interests' requirement," a spokesman said.
SMSF limited-recourse borrowing – which ensures the creditor has limited redress in the case of default – is very popular with business owners or professionals, such as dentists or lawyers, using the schemes to purchase their work premises, providing valuable tax breaks and the prospect of capital growth.
Financial advisers and mortgage brokers claim there has been a decrease in some of the more flagrant violations, such as lunch-time seminars aimed at encouraging investments, typically off-the-plan apartments.
But there are still offers circulating on the internet and direct offers from real estate agents and developers to advisers and investors, some encouraging scheme members to set up property development companies.