Property agents who do not act in clients’ best interests will face disciplinary action: Forum

We thank Mr Dylon Poh for his feedback on property agents who provide advice on the use of property to meet clients’ retirement or investment needs (Should real estate agents be regulated under the Financial Advisers Act?

, Nov 28). We appreciate the concerns raised. Property purchases are significant financial commitments and consumers should exercise prudence in making such decisions. 

Advice on property-related transactions falls outside the scope of the Financial Advisers Act (FAA), which regulates advice on investment products, such as stocks and mutual funds. Comparable jurisdictions such as Australia, Hong Kong and the UK do not require property agents providing property advice to be regulated under their financial advisory regulatory framework.

In Singapore, property agents are prohibited from acting as financial advisory representatives under the FAA. This protects consumers from potential conflicts of interest, such as when an agent might be incentivised to recommend a property purchase yielding higher commissions rather than a financial product that better meets the client’s needs.

Property agents are regulated under the Estate Agents Act (EAA) administered by the Council for Estate Agencies (CEA). Under the EAA, property agencies and agents must act honestly, professionally and in their clients’ best interests. Any opinions provided, including those made about potential yields or price appreciation, must be supported by verifiable facts, such as comparable data of similar properties in the same locality. Property advertisements must also not contain inaccurate, false or misleading claims or information. 

CEA will take enforcement action against property agencies and agents who fail to comply with the relevant rules. Depending on the severity of the breach, actions may include issuing letters of warning or censures, imposing financial penalties, or initiating disciplinary proceedings in more egregious cases. 

While property is not a financial product under the FAA, financial advisory representatives are required to consider clients’ existing financial commitments when providing advice. There are also other measures to promote prudent borrowing for property purchases, such as the total debt servicing ratio, loan-to-value requirements and CPF withdrawal limits. 

Joseph Kiong  
Director, Investigation & Inspection 
Council for Estate Agencies 

Should real estate agents be regulated under the Financial Advisers Act?: Forum

A house is possibly the biggest purchase for Singaporeans. Naturally, people seek advice for this purchase from friends, family and, importantly, property agents.

But what happens when this advice gets blurred with financial advice? 

It is not uncommon to hear property agents pitching the use of property as retirement funding or for investment.

If a person buys a property under the idea that it can be his retirement asset – an idea communicated by the property agent – surely this is considered financial advice?

Yet, if the outcome cannot be delivered, the property agent will not be held liable.

I have written to the Monetary Authority of Singapore, asking what constitutes financial advice. It replied with the guidelines on the provision of financial advisory service.

Not only are property agents not liable for this “financial advice”, but they also do not need to comply with the regulatory paperwork under the Financial Advisers Act.

Without a clear demarcation on financial advice, consumers are the ones who lose out at the end when the property retirement plan fails to deliver.

There have been discussions to regulate “finfluencers” as the line between financial advice and opinion gets blurred. 

If there are regulations imposed on finfluencers, shouldn’t there be regulations for property agents when it comes to financial advice? There surely is more material impact from a property agent’s financial advice than that of an influencer.

Dylon Poh

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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