ASIC writes scathing letter to real estate agents, who have reportedly been advising 'vulnerable' tenants to pay rent with their super

• ASIC has written a scathing letter to the real estate industry, after reports agents have been providing unlicensed advice to tenants.

• The regulator said it would prosecute agents who instruct struggling tenants to access their superannuation early in order to pay their rent.

• Agents found guilty of doing so face up to five years in prison and fines of $126,000 per contravention.

• Visit Business Insider Australia's homepage for more stories.

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It's not every day that one of Australia's financial regulators have to put an entire industry on notice.

So it's quite an achievement then that Australia's real estate agents have managed to incur the bitter wrath of ASIC on Friday as the watchdog urged them to stick to their lane.

"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," executive director Tim Mullaly scorned in the scathing letter sent to all of the country's real estate institutes.

"[This matter] is of significant concern to ASIC and, we would hope, you."

It comes as the threat of COVID-19, and the government restrictions aimed at stemming its spread, have shut down large swathes of the Australian economy and rendered hundreds of thousands of Australians newly unemployed through no fault of their own. As the virus simultaneously cannonballs large industries like hospitality, tourism, retail and aviation, many are now facing significant financial stress.

ASIC's damning accusation therein lies that agents have been offering unlicensed, and presumably also unsolicited, financial advice, to such tenants wishing to defer or reduce their rent as a result -- a clear breach of the law.

"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," ASIC said.

"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 [Corporations] Act."

Agents who have done so face up to five years imprisonment and fines of up to $126,000, while corporations may pay up to $1.26 million.

That's not even to touch on the questionable ethics involved in attempting to squeeze rent out of those who simply can't afford it. As economists and the super industry itself have warned, accessing super should be "a last resort" for those who have no other choice, given its potential to decimate the retirement savings of those who withdraw from it.

Fortunately, renters, by and large, shouldn't be forced to draw down their super simply to put a roof over their heads. State and territory governments have put a six-month moratorium on residential evictions, while the federal government has announced it will support Australian incomes through its separate JobSeeker and Jobkeeper programs.

With Prime Minister Scott Morrison repeatedly referring to 2020 as "the toughest year of our lives", landlords and real estate agents alike have been urged to work with tenants struggling to pay their rent, rather than try to bleed them dry.

It's hardly an unreasonable suggestion given rents are expected to come down anyway. The number of new rental listings around the country has surged around 20%, and even more in certain areas, according to the latest Domain figures, while the number of Australians looking for a place has actually decreased.

In the meantime, ASIC is talking tough, pledging to go after rogue agents.

"We will be raising these concerns with the relevant state regulatory bodies and will be writing directly to firms where it is alleged or brought to our attention that they have breached the law," Mullaly said.

"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."

Has your real estate agent or landlord been unreasonable during this difficult time? Get in touch jack.derwin@pedestriangroup.com.au