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ISCOVER
Jessica Darnbrough
The self-managed super fund (SMSF) space represents a lucrative sector for mortgage brokers, but dabbling in this space is not straightforward, one industry stakeholder has warned.
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Speaking to The Adviser, Property Investment Professionals of Australia (PIPA) chairman Ben Kingsley said that while mortgage brokers are in a good position to write SMSF products, they need to make sure they are well-versed in this lending sector before diving in.
Mr Kingsley said what many brokers don’t realise is just how complex and technical SMSF lending is.
“Mortgage brokers are in a position to write SMSF products under the NCCP regulations,” he said. “As long as they are an authorised representative of a credit licence holder or a licence holder themselves, then technically they can write SMSF products
“That said, brokers need to be skilled before they can start writing these types of products. The SMSF space is very technical. While the loan structuring is not too difficult by itself, understanding the process in which an SMSF acquires a property and how the bare trust needs to be structured is complicated.
“Failure to structure the trust right the first time could result in a catastrophe for the trustees. The trustees are ultimately responsible for their own SMSF, but they are looking for advice in this area, so I am encouraging brokers to upskill.”
Mr Kingsley added that ideally he would like to see regulation of the advice brokers give to their clients on issues related to self-managed super funds.
“Our observation is that financial planners, accountants and mortgage brokers remain uncertain about who can recommend a property for investment within an SMSF,” Mr Kingsley said, “and if industry professionals are confused, then what hope does that give us that consumers will navigate this investment channel successfully?
“With SMSFs attracting a growing number of Australians, many of whom are looking to invest in property, the lack of appropriate regulation is putting the retirements of millions of Australians at risk.
“Once again, we are calling on ASIC and the federal government to get up and take action and regulate property investment.”
