The corporate regulator has announced that the introduction of the best interests duty will be pushed back to 2021 to allow the industry to focus on managing the COVID-19 crisis.
The Australian Securities and Investments Commission (ASIC) has announced that it will defer the commencement date of the mortgage broker best interests duty (BID) until 1 January 2021.
The BID was initially scheduled to take effect on 1 July 2020.
According to the regulator, its decision was made to allow industry participants to “focus on immediate priorities and the needs of their customers” amid the COVID-19 crisis.
However, ASIC stressed that it expects entities to continue preparing for commencement on the extended timeline.
Industry stakeholders had been calling for the deferral, given the current operating environment and the lack of final guidance from ASIC.
Associations welcome move
The industry has welcomed the delay, with the CEO of the Mortgage & Finance Association of Australia (MFAA), Mike Felton, stating: “This is an extremely welcome announcement by ASIC and demonstrates the government’s support for the important role brokers play, especially at this crucial time.
“Over the past two months, the priority for brokers has been on assisting vulnerable customers to work through the available hardship relief options, to give them the best chance to navigate the financial challenges presented by this COVID event.
“Brokers have simultaneously had to also deal with a significant number of COVID-related issues, which have resulted in frequent and ongoing changes to processes and lender policies. This has placed pressure on resources which, coupled with the non-availability of the final regulations and regulatory guidance, has severely complicated our industry’s ability to comply with a 1 July start date.
“Throughout the past two months, the government and regulators have been pleased to receive ongoing feedback on the challenges our industry has been facing, and we are delighted that they have taken a decision to prioritise the support brokers provide to their customers and to allow industry additional time to comply,” Mr Felton said.
“All brokers remain committed to a best interests duty, and we are confident we now have the time to become legally compliant.”
The Finance Brokers Association of Australia (FBAA) says the decision by ASIC to defer the commencement date of the mortgage broker best interest duty (BID) and remuneration reforms was a welcome and necessary move.
However FBAA managing director Peter White AM said he has sought further clarification from ASIC on its statement that it would “continue to work towards releasing final guidance on both reforms in mid-2020.”
“Given the regulatory guide was due in May, we need some clarity from ASIC as to when it will be out, as mid-2020 is subjective.
“Once the guidance is at hand the FBAA will be conducting a series of education and compliance training for implementing BID.”
Mr White said the decision to push back the implementation date is “a credit to not only the work of the FBAA who has been lobbying government to push this back since last year, but to all the relevant bodies in our industry and to brokers.”
“This has transpired due to the faith and trust our government has in the broker community and our professionalism and integrity.”
Deferments and delays
ASIC has also announced that it would defer commencement of its design and distribution obligations until 5 October 2021, and would also delay reforms to remuneration in the banking sector.
This comes just hours after the federal government announced a six-month deferral on the implementation of reforms proposed in response to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The government said that “commencement dates contained in royal commission-related exposure draft legislation issued prior to the coronavirus pandemic will also extend by an additional six months”.
The delay aims to “enable the financial services industry to focus their efforts on planning for the recovery and supporting their customers and their staff during this unprecedented time”, according to Treasury.
Under the updated timetable, those measures that the government had indicated would be introduced into Parliament by 30 June 2020 will now be introduced by December 2020.
Similarly, those measures originally scheduled for introduction by December 2020 will now be introduced by 30 June 2021.
[Related: Royal commission implementation delayed]