Industry heads have been “working tirelessly” to delay the introduction of the best interests duty obligations for mortgage brokers in light of COVID-19 restrictions, it has been revealed.
Mark Haron, executive director of Connective, has revealed that the aggregator, in conjunction with other industry heads, has been pleading with the government to delay the implementation of best interests duty obligations for mortgage brokers, currently due to come into effect as of 1 July 2020.
“Best interests duty ... is obviously coming at us thick and fast,” Mr Haron said, noting that the industry is “very much collaborating” on the issue in light of recent economic conditions.
“What we’re requesting is that the best interests duty application be delayed,” he said.
The request has been made to delay the 1 July deadline, until conditions are such that brokers and banks can be appropriately prepared to take on the administrative and compliance changes required by the best interests duty obligations.
Mr Haron stated that the industry had been “working tirelessly” to delay the implementation of best interests duty obligations for mortgage brokers.
According to Mr Haron, the current economic climate, brought about by the outbreak of COVID-19 and the subsequent regulatory restrictions, has left banks and brokers preoccupied with assisting mortgage customers to find appropriate finance solutions and relief as their personal circumstances change.
“[With] everything else that is going on with banks and with brokers, it’s very hard for us to think about having to retrain, redeliver [and] upgrade systems and other things, to be able to meet a lot of the newer changes,” Mr Haron said.
He stated that currently, brokers “work very much in the customer’s interest already”. However, in order to meet the specific requirements imposed by the implementation of the best interests duty, “there’s still a lot of training to do”.
Further, he noted that current social distancing measures make it difficult to be able to train brokers in the latest requirements and ensure compliance under the new legislation, by the 1 July deadline.
“[I]t’s hard to do the physical training, in terms of the compliance side of things, without our compliance people being in the field [and] without us being able to run more face-to-face sessions and sitting with brokers.”
Mr Haron noted that while many brokers could “probably achieve” the necessary training through virtual means, not all brokers in the industry have access to the same resources, which could inhibit them from meeting compliance requirements.
“We know [that] Connective is in a good position, and [that] Connective brokers are, but that’s not necessarily representative of the whole industry,” he said.
“Therefore, hopefully we’ll see some more time given to the industry for those things to come into play.”
The aggregator executive also highlighted that brokers aren’t the only one making the call for the delay, and stated that the banks are also involved in the push to delay the best interests duty.
“You can understand why the banks are asking for it as well, because even though the best interests duty doesn’t apply to them, they’ve still got to be across it, they’ve still got to be able to make the changes, and a lot of those are system changes.”
In a time of such precarious economic conditions for a significant amount of the Australian public, Mr Haron said that the banks, like brokers, have “got more important things to be focusing on at the moment”.
You can hear more from Mr Haron and find out the latest in regulatory changes and happening in the legislative space in The Adviser’s upcoming webcast, The Adviser Live - Leadership series: Regulation and the Best Interests Duty.
Register for the live webcast to ensure you don’t miss it, here.
[Related: ASIC urged to ‘dial back’ BID guidance]
Hannah Dowling is a journalist for The Adviser and Mortgage Business.
Prior to joining Momentum Media, Hannah worked as a content producer for a podcast catering to property investors. She also spent six years working in the real estate sector at a local agency.
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