Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Financial Regulation

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GUEST OBSERVATION
The decision by the Coalition government in Canberra to push forward with plans to reform the regulatory regime around the provision of financial advice has received strong opposition from a number of quarters.
The Future of Financial Advice (FOFA) was originally the product of a Labor government seeking to address the consequences of high-profile corporate scandals and now their appropriateness and effectiveness is being called in to question.
In addition to a number of tweaks to provisions addressing conflicts and fees, perhaps most controversial is the government’s proposal to eliminate the catch-all requirement, included alongside a laundry-list of detailed prohibitions and mandates, that an adviser always act in the ‘best interest” of his or her client. There would seem to be nothing objectionable to that in principle and most clients would be shocked to have an adviser look them in the eye and say quite frankly that the advice they were providing was not in their best interest.
What is important to keep in mind, though, is the purpose of financial regulation and what the impact of open-ended, catch-all provisions is on how business is actually done day-to-day. A regulatory regime is a specially-crafted set of rules and procedures for a particular industry – in this case, financial services – that sits on top of the older and broader legal system which is of general application to the sum total of human activity. Where the statutes and judicial decisions that demarcate the boundaries of common law and equity are general in scope and to a large extent backwards looking, financial regulation is highly specific and meant to map very closely what is done in the industry currently and in the foreseeable future.
The difficulty with broad, vaguely drafted catch-all provisions becomes clear when you understand how they will be applied in practice. Imagine a rule with 17 specific requirements and prohibitions. The firm or individual seeking to comply with that rule proceeds to ensure that they are on the right side of each element. Sometime later, a regulator looks at their actions and determines that, even though fully compliant with the 17 explicit provisions, there is still for some reason something wrong in hindsight with what has occurred. But if the point of a financial regulatory regime is to be as specific as possible, what purpose does such a catch-all provision serve, especially considering that there are well-developed bodies of law, including the laws of fraud and misrepresentation, which already exists and can be relied on whenever needed?
In that light, such vague provisions can be seen as simply a “do-over” for regulators unable or unwilling to build out their case under the more explicit and detailed sections of the rulebook.
It is easy to confuse “more regulation” with “better regulation.” With every financial crisis there is the battle cry for more rules! What is actually needed in many cases is simply rules that more correctly reflect the actual problems and inefficiencies and pitfalls that have developed in the market recently. The sheer number of pages in the rule will tell you very little about how effective oversight will be.
Opponents of the Coalition’s reform proposals will say that their goal is iron-clad protection for consumers. Clearly, an admirable aspiration, when taken by itself. However, let’s not forget that the purpose of a financial regulatory regime is not to bring the level of risk down to nil. Of course, it is possible to do this, but then the volume of transactions will decline sharply and the vast financial machine of investment and savings would sputter to a halt. Instead, the goal is to maintain a level of investor protection that is acceptable while fostering a financial system that provides the economic goals, such as growth, that have been deemed essential for national prosperity.
I often give as an example a referee who is in charge of overseeing a soccer game. Too little involvement, and the game will degenerate into violence. Too much involvement, and the game will be a cacophony of whistles and flashing yellow and red cards. In either respect, the game being played will not be a game of soccer.
Where specific changes to specific rules are needed, then this can be made discreetly and with great effect. Vague catch-all provisions that in effect give regulators after-the-fact a second bite at the apple to focus on actions not previously identified as problematic merely serve to place clouds over firms and individuals that impede decision-making and create uncertainty for little clear purpose.
Timothy Spangler is adjunct professor at <a href="https://www.ucla.edu/" target="_blank" style="line-height: 1.3em;">University of California, Los Angeles</a>.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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po-LsXgBTHBmX

Understanding the limits of financial regulation

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The Australian Prudential Regulation Authority has issued tough draft guidelines on how it expects banks to monitor and manage home mortgage risks.
Upon <a href="https://www.apra.gov.au/adi/PrudentialFramework/Pages/adi-consultation-packages.aspx" target="_blank">the release</a>, APRA chairman John Laker noted "increasing evidence of lending with higher risk characteristics and it does not want this trend to continue".
the current concern sits  against the backdrop where residential mortgage exposures have exhibited low default and loss rates in the $1.3 trillion Australian mortgage market. But the continued low interest rate environment has authorities concerned for when rates take off again.
Aimed at complacency among residential mortgage lenders, the draft guidelines still fall short of the stricker macro­-prudential rules adopted in recent times by other regulators especially in New Zealand and Canada.
But the draft guidelines suggest banks consider "geographic concentrations" of risky loans.
There might also be new limits on loans relative to incomes along with stronger stress-testing borrowers.
There is also the possibility of reducing financial incentives and commissions to mortgage brokers.
APRA chairman John Laker said credit standards were needed given “very active competition” between lenders and rising property markets.
The Australian Financial Review columnist Tony Boyd recently calculated that the net present value of annual commissions paid to mortgage brokers is about $600 million, based on brokers handling about half of the $28 billion in mortgages settled each month.
APRA suggests commissions paid upfront tend to encourage less rigorous attention to loan application quality. 
APRA has told the banks to review appropriate monitoring and controls “to guard against incentives to pursue loans with inadequate or false verification, marginal serviceability, excessive leverage or unsuitable terms for a borrower”.
In Australia, it is standard market practice to pay brokers either an upfront commission or a trailing commission, or both. 
"Experience has shown that commissions paid upfront tend to encourage less rigorous attention to loan application quality," the report said.
"Trailing commissions are more likely to provide incentives for brokers to retain and monitor customers. 
"A prudent approach to the use of third parties for residential mortgage lending would include appropriate compensation measures for brokers.
"Such measures include the ADI being able to end or claw back commissions where there are high levels of delinquency or process failures on loans originated by third parties."
The acting chief executive of the Australian Bankers’ Association, Diane Tate, said the industry had expected the new guidance.
APRA said it expected banks to closely monitor the share of new loans with high loan-to-valuation ratios (LVRs). While Australia has no caps on LVRs, it said those above 90% clearly exposed banks to a higher risk of losses.
‘‘Historically, residential mortgage exposures have exhibited low default and loss rates,” it said in the draft.
“However, lengthy periods of economic growth combined with low interest rates and a sustained period of rising house prices can create a sense of complacency among residential mortgage lenders.’’
APRA is taking industry feedback on the draft policy until late July.
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jchancellor-FAypfDUnLy

Upfront mortgage broker commissions under review as APRA helps RBA on risky home lending standards

<html><body>
GUEST OBSERVATION
As public hearings into the <a href="https://futureofadvice.treasury.gov.au/Content/Content.aspx?doc=home.htm" target="_blank">Future of Financial Advice’s</a> Senate inquiry begin today, it’s probably not overstating the case to say the financial planning industry is at a crossroads.
With the F0FA regime currently in place, the opportunity presents itself for a new generation of financial planners committed to serving the best interests of consumers, without the conflicting incentive of commissions.
Unfortunately the old generation of financial planners appears intent on rejecting this opportunity. It’s probably not surprising given that, according to 2011 MFAA figures, only 11% of planners are aged under 30, and around 80% of planners are either owned or affiliated with the major banks. Hence the sales culture of the older planners and their vertically integrated organisations, wishing to cross-sell as much product as possible, is well entrenched.
As a consequence we are seeing an ongoing campaign (<a href="https://futureofadvice.treasury.gov.au/Content/Content.aspx?doc=home.htm" target="_blank">notably by some of the big banks</a>) to water down the FOFA legislation, which has only been in place since July 2013.
The proposed reforms to FOFA include removing the “opt-in” requirement where clients of financial advisers must indicate annually that they wish to continue the service, removing the need for an annual fee disclosure for clients engaging before 1 July, 2013, and a watering down of the “best interest” duty and provisions directed at removing conflicted remuneration; that is the payment of commissions, on general advice.
The process was postponed in March when assistant treasurer Arthur Sinodinos stepped aside and finance minister Mathias Cormann referred the legislative package to the Senate Economics Legislation Committee, but <a href="https://www.smh.com.au/business/fofa-reforms-sell-retirees-short-20140512-385tm" target="_blank">media reports</a> suggest the government may soon unveil its plans.
The banking industry claims much has changed since the impact of the global financial crisis revealed the extent of shameful practices in the advice industry.
The financial advice collapses in Australia between 2006 and 2010 - involving <a href="https://www.themonthly.com.au/issue/2011/february/1299634145/paul-barry/eye-storm" target="_blank">Storm Financial</a>, <a href="https://www.asic.gov.au/asic/asic.nsf/byheadline/Opes+Prime?openDocument" target="_blank">Opes Prime</a>, <a href="https://www.theglobalmail.org/feature/inside-the-offshore-fraud-the-villains-and-victims-of-australias-biggest-pension-scam/789/" target="_blank">Trio Capital</a> and <a href="https://www.propertyobserver.com.au/https://www.smh.com.au/news/business/westpoint-could-have-been-wound-up-years-ago/2006/07/05/1151779013363?from=rss" target="_blank">Westpoint Property Group</a> - resulted in more than A$6 billion in losses and involved more than 120,000 people.
All involved conflicted remuneration structures and high commissions as fundamental issues.
But more recent cases involving Commonwealth Financial Planning have been brought to light <a href="https://www.smh.com.au/business/banking-and-finance/cba-told-to-reopen-compensation-for-advice-victims-20140516-38fd7" target="_blank">by reporting from Fairfax’s Adele Ferguson</a> and <a href="https://www.abc.net.au/4corners/stories/2014/05/05/3995954.htm" target="_blank">the ABC’s Four Corners</a>.
Advisers in these cases exploited their clients by offering advice that prioritised their own best interest over that of their clients.
It is difficult to understand the extent of this exploitation without reference to specifics. In one of the key cases surrounding the Storm Financial collapse, ASIC pursued Macquarie Bank and Bank of Queensland on behalf of two investors aged in their sixties, <a href="https://storm.asic.gov.au/storm/storm.nsf/byheadline/Doyle%20proceedings?opendocument" target="_blank">Barry and Deanna Doyle</a>.
Despite the fact that the Doyles had indicated to their advisers that they had a low risk appetite, they were “double-geared” into the stock market by borrowing against their home and using the cash to raise yet more money to invest.
With only part-time income of less than $20,000, some Centrelink payments, and assets which consisted of a house worth $450,000 and $640,000 in superannuation savings, the Doyles ended up owning a share portfolio costing $2.26 million, on which annual interest payments eventually rose to $191,800.
Following the fall in asset prices the Doyles’ highly leveraged share portfolio was sold, consuming all of their superannuation savings. They were left with a debt of $456,000 on their previously unencumbered home, with insufficient income to make the repayments. In return for this disastrous investment advice, which saw them increase their borrowings or exposure to the stock market no fewer than 11 times in 25 months, the Doyles paid Storm $152,000 in fees.
Not surprising then that at the heart of the FOFA legislation are two key “gatekeeper” requirements to address conflicted remuneration. First, planners must prioritise their clients interests over their own, and second, the advice must be appropriate to the client’s own situation.
It is important to note here that there are advisers who do routinely act in their client’s best interest. This is reflected in the Financial Planning Association of Australia’s <a href="https://fpa.asn.au/financial-system-inquiry-submission-recommends-consideration-fairness-co-regulation/" target="_blank">submission to the Financial System Inquiry</a>, which argues that rather than water down the FOFA legislation, there is a good case to extend this “gatekeeper standard” to other areas of financial services to protect the interests of investors more broadly.
As we have been reminded only too often over recent weeks, we have an ageing population, increasing demands on the welfare system, and a very real need to maximise our retirement savings to ensure greater self-reliance in retirement. Given the generally poor level of financial literacy in this country, this is most unlikely to happen unless individuals can access low cost and scalable advice to assist in their retirement planning. The opportunities for the financial advice industry, and the investment community more generally, is therefore enormous.
The willingness with which individuals seek such advice, however, will depend on their confidence in the financial planning industry. Research from Rice Warner indicates that as a result of collapses such as those listed above, consumers hold a low view of financial advisers, with only 25% regarding them as ethical and honest. This mistrust results in Australians not seeking financial advice when it could be beneficial for them to do so.
The FOFA legislation presents a great opportunity for the financial advice industry collectively to adopt a more ethical client focused approach, re-instilling confidence in the industry. Without that confidence, individuals will not seek the advice they need, retirement savings will not be maximised, and there is likely to be an even greater need to rely on the age pension.
Deborah Ralston is Professor of Finance and Director at <a href="https://www.australiancentre.com.au/" target="_blank" style="line-height: 1.3em;">Australian Centre for Financial Studies</a><img src="https://counter.theconversation.edu.au/content/26822/count.gif" alt="The Conversation" width="1" height="1" style="font-size: 12px; line-height: 1.3em;">
Deborah Ralston is affiliated with Mortgage Choice Financial Planning and provided expert advice to ASIC on the Storm Financial case.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Financial planning industry at the crossroads: Why efforts to water down FOFA must be resisted

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Changes to the Future of Financial Advice laws could cost consumers more than $530 million a year in increased fees and charges, according to a report published today.
The report from Rice Warner says the reintroduction of commissions and other conflicted payments could hit consumers with a staggering $7.5 billion of extra costs over 14 years.
It also debunks the claims by banks and financial planners that diluting consumer protections will reduce the cost of advice.
Industry Super Australia chief executive David Whiteley said in a statement the multi-billion dollar impact explains the relentless lobbying by the banks and financial planners to reduce consumer protections.
“The reality is that cutting consumer protections just increases commissions and fees paid to financial planners to sell bank products.”
“It would seem that the banks’ objective is to be able to sell compulsory super and other products through financial planners and other staff, rather than provide Australians with the impartial financial advice that they want, need and deserve,” he said.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Aussies hit with $7.5 billion in extra costs due to FOFA changes

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We live in a crazy world where we are encouraged to invest and fund our own retirement but are not provided with adequate information or legislative protection to assist us to do so.
People who are looking to enter the property market are forced to rely on patchy information, as disclosure of sale results is not mandatory and access to past sales is hidden from view. In addition consumer protection laws for property investors are almost non-existent. As the wheels of the property market begin to turn this is the reality property investors face.
Currently there is no obligation for real estate agents or vendors to disclose sale results to the public. For years the industry has hidden behind privacy concerns but consider this, even a property sold via a public auction can be undisclosed. If you are watching the auction you would know the result but because of privacy concerns the vendor can elect to hide the result. Have you ever heard of anything so ludicrous!  
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Lack of regulation enables practitioners to sell investors a product or concept, under the guise of providing advice without taking into account an individual’s personal or financial circumstances.
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On any weekend as many as 10% - 20% of all auction results are not disclosed. Imagine if the board of BHP was to keep that much information hidden from the market place. There would be up roar and rightly so!
Further the historical growth of an individual asset is a key piece of information anyone buying property needs to know to make an informed decision. However what the property last sold for is usually very hard for the average punter to find. Again imagine if you were looking to purchase some BHP shares but had no access to historical values. It would be very difficult to work out fair market value.
But it gets worse for property investors. Legislation administered by the Australian Securities and Investment Commission (ASIC) provides protection for investors in shares, managed funds and super. Financial planners are required to consider each client’s personal and financial situation, investment knowledge and risk tolerance before giving recommendations on strategies or products. They must also provide a rationale for the recommendations, and disclose fees and commissions they will receive if the client acts on their advice.
Investors in direct property, however, receive no such protection from the nation’s investment watchdog. This is a glaring anomaly given that, according to the Tax Office, around 1.5 million Australians declare rental income for investment properties.
The ASIC Act’s rationale for excluding direct property from the definition of what constitutes a ‘financial product’ is that — unlike shares, super and managed funds, where investors entrust day-to-day control to a third party to generate a return — direct property investors retain direct control of decisions and returns.
The fact that direct property investors retain control of their assets doesn’t mean they are any more likely to make sound investment decisions. On the contrary, the absence of a third party increases the need for inclusion in ASIC’s safety net.
Lack of regulation enables practitioners to sell investors a product or concept, under the guise of providing advice without taking into account an individual’s personal or financial circumstances.
The regulator’s attitude to direct property as an asset class is clearly out of step with the way it’s being utilised as an investment in the wider community. It’s time the legislation was amended to recognise direct property as a financial product and give property investors the same level of protection and access to information as those holding other asset classes.
The time is ripe for the nation’s corporate watchdog to step up to the plate. When investors turn their attention to property, they’ll be in a better position to make informed investment choices and less prone to the fallout from lousy investment advice.
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Full disclosure and property investor protection

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Investors should expect regulations that allow self-managed superannuation funds to borrow to buy property to come under government scruitiny in the coming months, an expert in the area has said.
In February, Assistant Treasurer Arthur Sinodinos ruled out a specific review into limited recourse borrowing arrangements which SMSFs use when taking out loans to buy property.
Macquarie Bank executive director David Shirlow told Property Observer it was unlikely that the government would change its position, despite Senator Sinodinos standing aside and Finance Minister Mathias Cormann taking over as Acting Assistant Treasurer.
“Whilst the prospect of a separate and specific review of the matter is off the policy agenda for the time being, there are still some live policy issues in borrowing through super,” said Shirlow, who specialises in SMSFs and sits on the board of the SMSF Professionals’ Association of Australia (SPAA).
He said some stakeholders had argued that it was inappropriate for SMSFs to borrow for property investment at all, and that further constraints on advice provided regarding limited recourse borrowing arrangements and product offerings could be considered.
The arrangements are likely to be examined as part of the Financial System Inquiry, which is due to publish an interim report in mid-2014 and a final report by November.
Numerous submissions to the Inquiry have called for government to review SMSF borrowing and put in place additional consumer protection measures and education for trustees.
Big four accounting firm KPMG noted in its submission that super funds were tax-exempt in the pension phase, which provided incentives for SMSFs to invest in long-term assets such as residential property, and even more so if the property was negatively geared.
The Institute of Chartered Accountants in Australia strongly encouraged a review of existing arrangements to ascertain whether borrowing was appropriate and, if it was, to ensure the right legislative and regulatory frameworks were in place.
Mid-tier accounting firm Chan &amp; Naylor called for urgent action to create a dedicated national SMSF educational framework, lead by the Australian Securities and Investments Commission (ASIC), to teach the public about the merits and pitfalls of SMSF investments.
The Reserve Bank of Australia noted that SMSFs borrowing could expose members to greater financial risks (including excessive concentration in a single asset) than they understood they were taking.
CPA Australia raised concerns about the appropriateness of advice received by SMSF trustees and members, and potential misinformation being provided by unlicensed advisers such as real estate agents, mortgage brokers and property developers.
Shirlow said ASIC considered itself to have jurisdiction, under the Corporations Act, over some aspects of property sales people giving advice on limited recourse borrowing arrangements.
“Stakeholders such as SPAA would argue that there should be some more definite consumer protection rules in place to make sure that property spruiking is not going to lead to disaster,” he added.
The Association of Superannuation Funds of Australia has previously advocated for advice to SMSFs on asset classes such as investment property and limited recourse loans to be provided only through licensed financial planners.
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Investors should expect SMSF borrowing to come under greater government scrutiny

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Regional banks have called on the Financial System Inquiry to address issues that they say have created competitive advantages for the big four banks in home lending and other financial services.
In a joint submission to the inquiry, Bendigo and Adelaide Bank, BOQ, ME Bank and Suncorp Bank said the fall-out from the global financial crisis had favoured the major players.
“The banking landscape is now characterised by a higher degree of market concentration, consolidation and increasing dominance of the large banks relative to other providers,” the banks noted in their submission, which was prepared with the help of Pegasus Economics.
“While smaller banks and others provide customers with real alternatives and choice when it comes to financial services, these smaller participants do so at a distinct competitive disadvantage.”
Over the past few years, the major banks had become more vertically integrate with mortgage brokers and financial advice networks, which the regional banks’ submission claimed provided advantages in distributing home loans and other financial products.
The regional banks recommended the inquiry consider commissioning the Australian Securities and Investments Commission to survey the market to assess whether the major banks’ multi-brand strategies were confusing consumers about ownership.
“If it is found that confusion does exist, then a strong disclosure obligation must be introduced to ensure customers are making informed decisions,” the banks said in their submission.
The regional banks also noted that significant funding and cost advantages were available to the big banks deemed “systemically important” and that new regulatory and prudential requirements cost more, in relative terms, for the regional banks to implement.
They also claimed that asset requirements under the Basel capital adequacy framework made it more profitable for the big banks than for the regional banks to issue home loans.
The four big Australian banks, which had undertaken advanced Basel accreditation, were required to hold on average 1.3 cents of capital against each $1 of mortgage credit, UBS Securities Australia estimated. Banks operating under the standardised accreditation – including the regional participants – must hold up to three times more capital for the same loan.
The difference in capital requirements meant that the implied return on equity for ANZ to supply a home loan (estimated to be around 50 basis points) was 34.92% while the same mortgage delivered Bank of Queensland a return on equity of just 14.17%.
Other submissions to the Financial System Inquiry did not agree that competition in the mortgage market was inadequate.
The Reserve Bank of Australia in its submission said a good deal of focus had already been placed on competition in the mortgage market since the financial crisis and that competition in the market for small business loans was more of a concern.
“The [Reserve] Bank considers that this market should be the focus of inquiries regarding competition in lending, rather than the mortgage market,” it said.
Commonwealth Bank of Australia and ANZ agreed in their separate submissions that the inquiry should focus on improving the depth and liquidity of debt markets, on ensuring regulatory standards were consistent and on improving consumers’ financial literacy.
ANZ said: “An open market should continue to be the primary mechanism for maintaining an efficient, competitive financial system. Improvements to retail bond markets and removal of interest withholding taxes would promote efficient competition.”
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Regional banks highlight competitive disadvantages in Financial System Inquiry submission

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People who commit white collar crime in Australia are getting off lightly compared with those found guilty of similar offenses in other countries, a report has found.
Thousands of Australians have lost millions of dollars or been put at risk by the actions of financial planners and credit brokers who have committed fraud, provided inappropriate advice and operated without an appropriate license.
A report by the Australia Securities and Investments Commission has found the penalties that can be imposed for such offenses in Australia are limited in some cases compared with those available to regulators in other jurisdictions.
For example, people who provide financial services without a license in Australia can only be fined up to $34,000. In contrast, the report found that people guilty of the same offenses in the US face maximum fines of $5.6 million. In the UK, the maximum fine is unlimited.
The maximum civil penalty in Australia for giving inappropriate advice is $200,000, while in the UK the maximum is unlimited, and in Hong Kong it is the greater of $1.4 million or three times the benefit gained by the wrongdoer. 
Individuals who broke corporate rules in the US could be sentenced to prison terms of up to 20 years. In Australia, and most other jurisdictions studied, the maximum prison term was 10 years for criminal penalties such as fraud and insider trading. The maximum prison term for providing financial services without a license in Australia is just two years.
The report compared maximum penalties in Australia to penalties imposed for similar offenses in Hong Kong, the United Kingdom, the United States and Canadian province, Ontario.
It found that regulators elsewhere could, in addition to imposing fines and prison terms, remove financial benefits that wrongdoers had obtained through illegal profits or avoided losses. ASIC does not have that power, although it can ask other agencies to bring an action to confiscate the proceeds of crime.
The relatively low fixed fines that ASIC can impose and the fact that it cannot remove the proceeds of crime itself meant that wrongdoers may still profit from their conduct and not be deterred by the penalties, the report warned.
“The maximum fine that may be imposed may be substantially lower than the financial benefit obtained as a result of the wrongdoing,” it said.
The report also found inconsistencies between penalties that could apply to similar offenses under different pieces of legislation within Australia. For instance, offering a financial service without a license attracted a criminal penalty under the Corporations Act with individuals fined up to $34,000, while someone giving unlicensed credit advice could be subject to the same criminal penalty, or a civil penalty of up to $340,000.
Civil penalties in the Corporations Act have been eroded by inflation as they have not increased since they were set in 1992 for individuals and 2004 for corporations. In 2007, it was suggested that the penalties should be lifted following a Treasury review, although no increases were made.
The report is the first of its kind in over a decade and ASIC has recommended further work be done.
Its findings will be fed into ASIC’s submission to the Financial System Inquiry, which closes for comment on Friday, March 28.
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