The corporate regulator has published the long-awaited guidance concerning the application of the best interests duty on mortgage brokers.
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:
Specifically, the guidance states that ASIC expects brokers to:
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guidance also recommends the steps brokers can take in each stage of the credit assistance process, as outlined in the draft guidance (see table below).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.”
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]
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