Coronavirus: ASIC warns real estate agents and landlords over superannuation drawdown advice

The corporate watchdog has warned estate agents and landlords they could face up to five years jail for talking to tenants about super.

ASIC says real estate agents are in danger of providing unlicensed financial advice to tenants.

The corporate watchdog has warned landlords and real estate agents they could face up to five years in prison or penalties of up to $1.3 million by advising renters to draw down on the superannuation if they are unable to pay rent.

The Australian Securities and Investments Commission enforcement director Tim Mullaly sent a letter to the Real Estate Institute, to be forwarded onto the industry group’s members, warning the behaviour could breach financial advice laws restricting advice from unlicensed operators and break rules requiring advice be in the best interests of customers.

My landlord owns 7 properties and just sent a link advising how to access any super I might have after I advised I’d just lost my job and might have trouble paying future rent on time. How’s your day going?

— Walk the Torque (@TorqueTurkey) March 30, 2020

Mr Mullaly said ASIC would be talking to state police forces and would be contacting real estate agents found to be breaching the laws.

“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.

The Morrison government has launched a coronavirus crisis plan to allow laid off workers to access up to $20,000 worth of superannuation savings over the next two years.

“ASIC is aware that some real estate agents are advising tenants who are unable to pay their rent, or who may find themselves in such a situation in future, to consider applying for early release of their superannuation,” Mr Mullaly said.

“This conduct by some real estate agents is of significant concern to ASIC and, we would hope, you,” he said.

Email from realestate agent: “We strongly recommend u enquire regarding your eligibility for Early access to Super. The gov has indicated those experiencing financial hardship can apply for early release of their Super funds.” Great. Landlords can get tennants’ retirement savings

— David M. Green 🧢 (@David_M_Green) March 31, 2020

“Financial advice must only be provided by qualified and licensed financial advisers, or financial counsellors, not by real estate agents who neither hold the requisite licence, nor are an authorised representative of an Australian Financial Services Licensee.”

Providing unlicensed financial advice can result in jail time of up to five years, fines on individuals of up to $126,000 and on corporations of up to $1.26m.

“Tenants facing financial difficulty need sound financial guidance and potentially debt counselling. Specifically pointing them to and recommending them to consider the specific possibility of accessing superannuation is, again, likely to amount to a breach of the Act,” Mr Mullaly said.

I have seen real estate agent letters to tenants telling thim to access their superannuation and other ways to make sure rent is paid. Such sound financial advice from a bunch of vampires

— Tony (@tonyvibo) April 2, 2020

One real estate agency owned by Ray White in inner Sydney had to remove a Youtube video it had sent to its tenants in an email on Thursday, which it had made after it was approached by renters with questions about “rent relief and what options you have”.

“We have formulated a video, from our Principal ... which we hope will give some guidance on how to navigate through these difficult times,” said the email, which has been seen by The Australian.

We haven’t even spoken to our real estate agents or landlords, but we still got this email. They’ll only speak to the Landlord (sic) on our behalf if we can prove that we’ve tried to access our super to pay rent. And having your hours reduced doesn’t count, you have to be fired! pic.twitter.com/YZ9lH4fmsk

— jesse ₍⸍⸌̣ʷ̣̫⸍̣⸌₎ (@wizardfortress) April 1, 2020

The link to the youtube video now says the video had “been removed by the uploader”.

“We requested this video be removed because we are erring on the side of caution in this highly sensitive environment,” a Ray White spokeswoman said.

“[The agent] was not giving financial advice, however he was listing off the various stimulus measures that have been announced and are available to tenants who are under financial stress. We have been inundated with calls across the country from both tenants and landlords who are concerned and confused and anticipate the imminent government announcement around tenancies, which we trust will provide clarity to all parties”