Property investment professionals are being encouraged to sharpen their understanding of financial advice laws, as regulators and industry bodies highlight the importance of staying within the “general advice” lane.
With more Australians exploring property as a long‑term wealth strategy, the distinction between general and personal financial advice has become increasingly significant.
Under the Corporations Act, only those holding an Australian Financial Services (AFS) licence can provide personal financial advice, which is guidance that takes into account an individual’s financial circumstances, goals, or needs.
ASIC has repeatedly warned that providing property investment recommendations regarding ownership structures may constitute personal financial advice, and enforcement actions show the regulator closely monitors unlicensed operators.
The Westpac decision in 2019 remains central to how that boundary is interpreted. Westpac had argued it was offering only general advice when encouraging customers to consolidate superannuation accounts, but the Federal Court found that a reasonable person could believe the advice was tailored. The ruling confirmed that tone, context, and implied knowledge can turn seemingly general commentary into personal advice.
This distinction becomes even more important when discussions turn to self‑managed super funds (SMSFs) and trust structures, both of which sit within the regulated financial advice framework when used as part of an investment strategy.
Only AFS‑licensed financial advisers – or accountants with a limited AFS licence for SMSF‑related advice – can recommend establishing an SMSF or advise on using an SMSF or trust as part of a client’s investment strategy.
Property investment professionals may explain these structures in general terms but recommending them for an individual client constitutes personal financial advice.
The consequences for crossing that line can be significant. Civil penalties for unlicensed personal financial advice can exceed $1.5 million for individuals and $15 million or more for corporations, depending on turnover and benefit gained.
In more serious or reckless cases, individuals may face criminal charges, including potential imprisonment. ASIC can also issue banning orders, require compensation to affected clients, or seek enforceable undertakings.
For property investment professionals, the message is straightforward – continue offering market insights and property investment expertise but avoid straying into financial product recommendations.
For our PIPA members who would like further information on this important topic, please see: General and personal financial advice – Moneysmart.gov.au
