As ASIC’s best interests duty review continues, aggregators have said the real test of BID is shifting from broker intent to how convincingly files convey the story of each recommendation.
The Australian Securities and Investments Commission’s ongoing BID review, launched in June 2025, has prompted aggregators to warn that generic file notes, patchy documentation, and poorly managed conflicts could turn otherwise sound advice into regulatory trouble.
At a Mortgage & Finance Association of Australia (MFAA) webinar on BID compliance, held on Tuesday (17 March), legal heads from Australian Finance Group (AFG), Connective, and Mortgage Choice agreed that most brokers were acting in their customers’ best interests, yet cautioned that the review would judge them on whether their documentation stood up to forensic inspection.
Documentation risk moves to the top of the list
When asked to nominate the single biggest BID risk, REA Group general counsel Scott Stierli said his concern was how information was stored.
He explained that records were still frequently handwritten or scattered instead of being consolidated.
“I would say documentation gaps, and not that it is missing, but it’s not in one spot. Think bringing that all to one spot will be the biggest risk,” he said.
AFG head of compliance Shirley Elliot said the same pattern was emerging across her network and added that the absence of cohesive files was a major issue in BID audits.
“Documentation gaps, but followed by a really close second of managing conflicts, because I still think there’s a lot of confusion around what’s required there,” she said.
Family ties case highlights conflict confusion
To explore how conflicts could undermine BID, the panel worked through an Australian Financial Complaints Authority (AFCA) dispute involving a South Australian couple who bought land, signed a construction contract after being offered a $20,000 incentive, and obtained a $500,000 loan through Horizon Finance.
The case revealed that the director of Horizon was the father of both the land vendor and the director of the building company, with the clients later alleging incorrect and unauthorised invoices.
Elliot said the structure left no doubt that a direct conflict of interest existed and that the real failing was the absence of proper disclosure.
“I think it’s unambiguously a conflict does exist and that’s because the managing director of Horizon Finance, was the father of both the land vendor and the director of Summit Homes,” she said.
“I think the question for this case study isn’t about whether or not a conflict existed, but whether or not it was identified and properly managed.”
Connective general counsel Daniel Oh said conflicts were not automatically prohibited, yet became a BID issue when the broker’s interest diverged from the client’s.
“If there is a conflict between your interests and those of your customer, you have to prioritise the interest of your customer first and foremost,” he said.
Stierli said less obvious conflicts were also causing concern, particularly where brokers maintained referral relationships that generated additional revenue from the same pool of clients.
He stressed that this could be solved through transparency.
“Where you do have a conflict, you have to make sure it’s recorded, and you’ve got to document quite clearly how what you’re doing is still in the consumer’s best interest,” he said.
Higher‑rate loans demand robust price narrative
The second case study examined a refinancing request from the Turners, a couple with an $820,000 loan, a bumpy income, and large, irregular expenses.
Their broker short-listed three options: the cheapest rate with no offset account, a mid‑priced loan with a single offset, and a more expensive package that offered multiple offsets.
Elliot said the scenario illustrated how ASIC’s focus on price interacted with the reality that other, more expensive recommendations could legitimately take precedence if properly documented.
“We certainly are in an environment where our regulator seems to be price‑focused,” she said.
“One of the things that I know we’ve all been sharing with them in the current BID review is that where a broker sits down and genuinely prioritises customer interests, then as long as those interests are being met, that it is ok.
“That’s where a broker needs to make sure that they document what those priorities are and what the order of those priorities are.”
Oh said early feedback from ASIC’s review had highlighted that explanations on many aggregator files were too generic when the cheapest option was not selected.
“Short generic statements are insufficient, so you need to personalise it to your customer,” he outlined.
‘Not broker performance – it’s the evidence’
The panel closed by emphasising that ASIC’s review should not be read as a verdict that brokers were failing BID.
Oh said he remained confident that the majority of his network was acting in line with the law, yet said he believed the regulator wanted to see clearer narratives.
“I think where possibly the gap is where ASIC wants to see the evidence and the demonstration of acting in best interest,” he said.
“My gut is telling me it’s not actually the broker performance that is in question; it’s the way they demonstrate their best interest duty.”
Stierli said he was seeing similar themes in ASIC’s requests and suggested that the challenge was making the supporting material accessible and coherent.
“I think most brokers are acting in their clients’ best interests and can evidence it,” he said.
“The thing is, you have to pull a couple of strokes – present the emails, the back files – I think it is quite clear ASIC wants to see it presented in a nice handy little package.”
[Related: ASIC reveals BID review’s next steps and findings]
