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Investor clubs under the gun as trade investigation looms

THE Ministry of Fair Trading has real estate investment advice schemes firmly in sights, confirming it is in the process of seeking legal advice into a possible investigation of industry players.

The Investors Club of Australia (WA) told Business News it is one of the groups Fair Trading may examine, the third time it faces regulatory scrutiny in its five-year history.

But Investors Club WA branch manager Barry Atkins was unconcerned about the possible investigation into the club’s operations, saying it had nothing to hide and had, in fact, been commended for its work by a number of Australian authorities.

No action or recommendation has ever been taken or made against the club from the previous investigations.

“The Ministry has been looking at us since we started here five years ago,” Mr Atkins said.

“In fact, I would welcome an investigation because I have no qualms about our operations and it would clear the air once and for all.”

Mr Atkins believes that, if an investigation is held, it would be with a view to classifying the club as a real estate agent and forcing it to obtain licences.

The club operates by researching and assessing properties up for sale – using 20 points of reference – that members may be interested in buying.

The club acts on behalf of members in negotiating an appropriate price with the vendor, and then steps out of the settlement process, Mr Atkins said.

Vendors pay the club a small fee for its efforts in finding a buyer for their property.

The Ministry declined to give a reason for the proposed investigations.

Mr Atkins said the Queensland branch of the club had been investigated and cleared by the Queensland Ministry of Fair Trading, while at a national level, the club had been checked and cleared by the Australian Prudential Regulatory Authority and the Australian Competition and Consumer Commission.

Mr Atkins said the club was growing in its popularity and suggested some sectors of the real estate industry may see it as a threat.

“We have helped more than 2600 people into property so far and distribute 40,000 newsletters a month,” he said.

“We don’t ask for any money, it is a free service to help the mums and dads into property investment.”

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