Powered by MOMENTUM MEDIA
subscribe to our newsletter

ASIC sheds light on new mortgage broker reforms

ASIC has outlined the obligations of mortgage brokers under the forthcoming best interests duty. 

The Australian Securities and Investments Commission (ASIC) has published Regulatory Guide 273 Mortgage brokers: Best interests duty (RG 273) – guidance aimed at assisting in the application of the new best interests duty (BID) for mortgage brokers, which is set to take effect in January 2021.

ASIC’s high-level, principles-based guidance seeks to outline obligations under the Financial Sector Reform (Hayne Royal Commission Response – Protecting Consumers [2019 Measures]) Bill 2019 and does not prescribe minimum standards of conduct nor impose new or additional obligations.

The guidance contains ASIC’s views on how mortgage brokers may comply with their obligations at “key stages” of the credit assistance process, including:

  • the effect of the range of credit providers and products brokers can access;
  • recommending packages of credit products; and
  • the types of records that may be kept to demonstrate compliance.

Specifically, the guidance states that ASIC expects brokers to:

Advertisement
Advertisement
  • assess what product(s) and what credit assistance would be in each consumer’s best interests;
  • exercise their judgment when determining what is in the consumer’s best interests, adding that in some situations, this would include “challenging the consumer’s perception of their best interests”;
  • consider the product holistically and weighing up the relevant factors based on the value and benefits they offer that consumer;
  • present consumers with more than one option, adding that where there are multiple options for a consumer to consider, they should be presented in a manner consistent with the consumer’s best interests; and
  • hold evidence of compliance with the best interests obligations – predominantly from the broker’s records – to help demonstrate compliance and help credit licensees “take reasonable steps” to ensure credit representatives comply with these obligations.

The guidance also recommends the steps brokers can take in each stage of the credit assistance process, as outlined in the draft guidance (see table below). 

Following the release of the new guidance, ASIC commissioner Sean Hughes commented: “These are important and timely reforms for the mortgage broking industry and for customers shopping for a loan.

“This reform was legislated by the Parliament to improve the quality of credit assistance provided to consumers. ASIC supports that objective.

“Consumers rightly expect mortgage brokers to act in their best interests, and ASIC’s guidance describes how we expect them to do so. Under these new obligations, let there be no doubt – the consumer must always come first.”

PROMOTED CONTENT


According to Mr Hughes, the guidance was released “as early as effectively possible” to ensure the industry has ample time to prepare for the commencement in January 2021.

[Related: New BID guidance imminent]

ASIC sheds light on new mortgage broker reforms
mortgagebusiness

If you’re feeling overworked and overwhelmed in this fast-paced mortgage market, it’s time to make some changes, and the Business Accelerator Program can help! Early bird tickets are on sale now. Work smarter, not harder, this year.

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The prudential regulator has written to ADIs to ensure that they are proactively managing lending risks and focusing on lending standards am...

As it waits for APRA to approve its acquisition of MyLife MyFinance, Challenger has flagged plans to expand the bank’s lending remit to co...

Australia has the second-highest mortgage debt as a proportion of GDP among OECD nations, according to a new report. ...

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.