The long-awaited report from the banking royal commission proves that even within regulated environments lawlessness can be rife.
Property Investment Professionals of Australia (PIPA) chairman Peter Koulizos said the multitude of examples of potentially criminal activity within the financial services sector was a sign of what can happen when money becomes more important than client outcomes.
“If this is what happens in a regulated industry, imagine the situation in the property investment advice sector where spruikers can ruin people’s financial lives without much chance of prosecution because it is an unregulated environment?” Mr Koulizos said.
“The report suggests that many in the financial services sector were motivated by greed rather than acting in their client’s best interests, however, such a blanket statement does a disservice to the majority of honest employees working in the industry.
“Mortgage brokers, for example, create much-needed competition and deserve to be paid for their professional service, so we’re pleased that the Federal Government has questioned the recommendation that commissions be paid by consumers rather than banks – who are the ones who can clearly afford it the most.”
The 2018 PIPA Investor Sentiment Survey found that more than 75 per cent of investors secured their last investment loan through a mortgage broker, up slightly from the year before, and dramatically more than the 2015 number of 65 per cent.
About 86 per cent intend to finance their next investment loan through a broker, according to the survey.
Mr Koulizos said he hoped the report’s release would bring an end to the over-the-top credit restrictions that had been in play for more than three years, which were starting to have a negative impact on the national economy.
“Solid borrowers, who should have no problem securing finance under normal credit conditions, are getting knocked back for silly reasons such as spending $50 on Uber Eats on a Friday night,” he said.
“With property prices continuing to fall in our two biggest capital cities, inflation stubbornly low, and wages flat-lining, lenders need to release their strangle-hold on credit so our economy can get moving again”
While the health of the banking sector is vital for our economy, Mr Koulizos said so too was the property market, which is worth $7.5 trillion compared to superannuation on $2.7 trillion, according to CoreLogic.
“It’s time for the Federal Government to get serious about protecting consumers from unscrupulous spruikers who pretend to give property investment ‘advice’, but all they’re really do is lining their own back pockets without having to worry about breaking the law – because there isn’t one.”
According to the 2018 PIPA Investor Sentiment Survey, an overwhelming majority of respondents (95 per cent) believe that any provider of advice should have formal training, and almost all (90 per cent) believe that any provider of property investment advice should be regulated or licensed.
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The Property Investment Professionals of Australia (PIPA) is a not-for-profit association established by industry practitioners with the objective of representing and raising the professional standards of all operators involved with property investment.
For more information visit www.pipa.asn.au