The record $18 million fine imposed on a property spruiker for misleading property buyers and investors proves that urgent regulation of property investment advice is needed, according to the Property Investment Professionals of Australia (PIPA).
The Federal Court has imposed record penalties of $18 million against We Buy Houses We Buy Houses and its director, Rick Otton, for making false or misleading representations about how people could create wealth through buying and selling real estate, following action by the Australian Competition & Consumer Commission (ACCC).
PIPA Chairman Peter Koulizos said the record fine was a sign that the ACCC was serious about taking action against unscrupulous operators promising an unachievable level of financial success.
“Hats off to the ACCC for staying the course on an investigation that began in 2015, which has resulted in $18 million-worth of penalties,” Mr Koulizos said.
“Unfortunately, there remains far too many crooks working in our industry.
“That’s because there isn’t any property investment advice regulation, which creates a breeding ground for greed and bad behaviour, with the general public the ultimate victim.”
Mr Koulizos said property investment was a long-term wealth creation strategy, with most successful investors owning property for 20 years or more, so anyone promising short-term profits was a spruiker not an expert.
According to the ACCC, We Buy Houses and Mr Otton taught real estate investment strategies via free seminars, and paid “boot camps” and mentoring programs that claimed people could:
- buy a house for $1, without needing a deposit, bank loan or real estate experience, or using little or none of their own money
- create passive income streams through property and quit their jobs
- build a property portfolio without their own money invested, new bank loans or any real estate experience, and
- start making profits immediately and create or generate wealth.
Because of the paucity of legislation, Mr Koulizos said PIPA was created so that property buyers could have confidence they were dealing with an ethical professional when investing in real estate.
PIPA has developed codes of ethics and conduct, which all of its members voluntarily agree to abide with, as well as professional standards of accreditation and education for the property investment industry, including a Qualified Property Investment Adviser accreditation course, he said.
“PIPA offers investors’ confidence in a marketplace where trust is so lacking and where multimillion-dollar fines to spruikers highlight what is at stake,” Mr Koulizos said.
“Whether they’re looking for a property investment adviser, mortgage broker or accountant – essentially any professional involved in the property investment process – investors should look for the PIPA logo.
“PIPA members must adhere to our strict code of conduct, which offers property investors the best assurance that they are dealing with a trusted professional.”
Investors can search for and locate a PIPA member by visiting www.pipa.asn.au
NOTE TO EDITORS
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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