Following ASIC’s latest BID review update, the aggregator has said broker files now carry far greater consequences.
Major aggregator Connective is urging brokers to overhaul their Best Interests Duty (BID) documentation after ASIC signalled its review would scrutinise product recommendation files and data.
ASIC launched its BID data exercise in June 2025 – issuing compulsory notices to around six national aggregators in what the regulator described as its first large‑scale assessment of compliance since the regime began in January 2021.
Nathan Bourne, ASIC’s senior executive leader for credit, banking and general insurance, confirmed last week that the regulator was analysing extensive datasets from those notices, including product recommendation samples, commission information, complaints data, and details of monitoring and supervision programs.
Connective alone said it had provided more than 860,000 lines of data, covering loan flows, income structures and internal oversight frameworks – with the aggregator stressing that the volume underlined that BID would “remain front and centre” through 2026.
ASIC has indicated the review is aimed at benchmarking compliance and understanding how BID works in practice – yet has also left the door open to further surveillance or enforcement activity if serious issues are uncovered.
Record‑keeping, not intent, in ASIC’s sights
Against that backdrop, Connective’s group legal counsel Daniel Oh said the regulator’s review marked a shift from focusing on brokers’ intentions to scrutinising the evidence in their files.
“Best Interests Duty is now five years old and ASIC have left the industry alone,” Oh told Connective’s recent Compliance Outlook webinar, adding that the regulator had gathered “a lot of data” and was preparing to publish its findings.
“From their initial comments, the message is simple. It is not enough to act in your client’s best interests. You must be able to demonstrate it clearly and convincingly in your file notes and BID commentary,” he said.
Connective distilled the message into two priorities for 2026, that being to clearly evidence lender choice when the cheapest option was not selected, and stamping out generic BID commentary that did not explain why a particular recommendation was made.
Oh said preliminary observations from ASIC’s review suggested that files containing vague phrases were unlikely to satisfy a regulator reviewing the notes in isolation – even when the underlying recommendation was sound.
“Our brokers are doing the right thing. They act in their client’s best interests. But if your file only contains generic statements like ‘better turnaround time’ or ‘valuation considerations’, that is unlikely to satisfy a regulator auditing the file in isolation,” he said.
Lender choice under the microscope
Connective’s head of governance Amanda Stirling said early feedback from the exercise showed that ASIC was paying close attention to cases where the lowest‑rate lender was not used or where only one lender option was documented.
“Cost is an easy comparison point. But lending decisions are rarely one‑dimensional,” Stirling said, while noting that ASIC accepted that the cheapest rate was not always right for the customer.
She said the expectation, however, was for files to clearly set out how the recommended product aligned with the client’s stated needs, objectives and circumstances, and why any higher‑priced or more limited options still met BID obligations
"What they expect to see is a clear narrative explaining how the recommendation aligns to the client’s stated needs, objectives and circumstances,” she said.
“It’s about telling the story. Why this lender? Why not the others? How does this meet the client’s requirements?”
Stirling said files that drew follow‑up questions typically featured “generic commentary” as opposed to a detailed explanation.
Survey shows confidence and documentation gap
During the Compliance Outlook webinar, Connective polled 280 attendees on their biggest regulatory concerns for the year ahead.
BID and responsible lending obligations were cited as the top worry by 41 per cent of respondents, while 39 per cent pointed to cyber security and privacy – reflecting the twin focus of ASIC’s current agenda.
When asked whether ASIC could determine from their BID commentary alone if they had acted in their client’s best interests, 96 per cent of brokers said they were confident their notes showed compliance – although just under half acknowledged they could write more.
Oh said the results suggested most brokers felt they were meeting the spirit of BID, yet that many were still falling short of the level of detail required if a regulator or external dispute body reviewed the file without additional context.
Documentation as defence and differentiator
Connective has flagged BID documentation, complaints handling and cyber security as core themes of its 2026 compliance education program.
Oh stressed that strong documentation was not only a regulatory expectation but also a broker’s “first line of defence” if a matter escalated to the Australian Financial Complaints Authority.
“If a matter ends up at AFCA, your file is your first line of defence. A well‑articulated BID summary communicated to your client can materially change the trajectory of a dispute,” he said.
He added that as brokers continue to grow market share on the back of client trust and perceived choice – clear, client‑centred documentation reinforced professionalism.
Connective said it expected the regulator to publish either a media release or a concise report outlining stronger and weaker practices across the sector.
[Related: ASIC reveals BID review’s next steps and findings]
