ASIC exercise 'always anticipated' say broker associations

Specifically, the guidance stated that ASIC expects brokers to:

• assess what product(s) and what credit assistance would be in each consumer’s best interests;

• exercise their judgment when determining what is in the consumer’s best interests, adding that in some situations, this would include “challenging the consumer’s perception of their best interests”;

• consider the product holistically and weighing up the relevant factors based on the value and benefits they offer that consumer;

• present consumers with more than one option, adding that where there are multiple options for a consumer to consider, they should be presented in a manner consistent with the consumer’s best interests; and

• hold evidence of compliance with the best interests obligations – predominantly from the broker’s records – to help demonstrate compliance and help credit licensees “take reasonable steps” to ensure credit representatives comply with these obligations.

The guidance also recommended the steps brokers can take in each stage of the credit assistance process.

The financial services regulator is now working with some aggregators asking them to provide details of how the BID is being met by its brokers and broker conduct more generally.

While the regulator will generally undertake reviews of compliance to new regulations around five years after implementation, it does not appear that this industry-wide review is targeting all aggregators. Instead, around six national aggregators are believed to be working with ASIC to provide this data, with a traffic-light system being utilised.

The compulsory notice to comply comes following months of consultation with industry and major aggregators, and will help develop a data bank on how the broking industry’s BID is being followed in order to establish a baseline. This may include access to commission schedules, access to loan application files and management of conflicts of interest.

While there has been no suggestion that ASIC is concerned that BID has been breached, ASIC Commissioner Alan Kirkland (former CHOICE CEO, 2012-2023) has suggested that further action may be taken if significant breaches are found.

ASIC 'gathering data on patterns of lending involving brokers'

Delivering a speech entitled ‘improving protection for people who use credit’ at the Australian Finance Industry Association (AFIA) Risk Summit in Surfers Paradise on Tuesday (17 June), Kirkland said: “We continue to be interested in the conduct of brokers and are currently engaging with several large mortgage aggregators to gather data on patterns of lending involving brokers, which may inform further action by ASIC.”

When contacted by The Adviser for further comment and details on the exercise, an ASIC spokesperson said the regulator had no further comment at this stage.

However, in his speech, Kirkland outlined that ASIC was focusing on consumer protections when it comes to credit (including that lending needs to be fair, should take account of the consumers’ needs and objectives and should not put consumers at risk of financial hardship).

He said that ASIC’s current and upcoming work in relation to lending practices, financial hardship, and debt management and credit repair, as outlined in its 2025 enforcement priorities - but revealed that this work will also encompass mortgage brokers.

“I would note that our work in relation to lending conduct also includes an interest in the role of mortgage brokers,” he told the AFIA conference.

“We recognise the continued growth in the role of brokers in home lending.

“The latest data from the Mortgage and Finance Association of Australia indicates that around 75 per cent of new residential mortgages are being facilitated by brokers, up from 67 per cent in 2021,” he said, citing the MFAA’s Value of Mortgage and Finance Broking 2025 Report.

“While this sector attracts a relatively low level of consumer complaints, we are conscious that misconduct by brokers will not always be obvious to their customers,” Kirkland continued.

“And our track record of regulatory action indicates that the sector is not immune from misconduct.”

The ASIC Commissioner told the AFIA conference that - in the five years from July 2019 to December 2024 - ASIC had taken regulatory action against a number of “finance and mortgage brokers” resulting in 11 individuals or companies being handed criminal sentences, 14 people being banned from credit activities and the cancellation of 22 credit licences and one licence suspension.

He also flagged ASIC's recent action against RAMS for what it alleges to be "systemic misconduct".

The ASIC Commissioner added that it would also be taking "a closer interest in the debt collection practices of firms regulated by ASIC."

Kirkland concluded: "In closing, I want to note that all of ASIC’s work – the regulatory priorities that we identify, and the enforcement matters that we pursue – are guided by our vision, which is for a fair, strong and efficient financial system for all Australians.

"We recognise the important role of credit within that financial system – and I recognise the role that the people in this room play in helping to ensure that credit is provided fairly and in line with the interests of consumers."

'This was always anticipated', say broker associations

Speaking to The Adviser about the ASIC exercise, the Mortgage & Finance Association of Australia (MFAA) noted that this type of interest and activity was a normal part of ASIC’s supervisory role.

Indeed, the association revealed that the BID compliance work had originally commenced in 2022, before going on hiatus.

MFAA CEO Anja Pannek commented: “ASIC has resumed its engagement with aggregators as part of its ongoing monitoring of broker conduct and compliance with the mortgage broker best interests duty (BID). This exercise originally commenced in 2022 and, while it paused for a period, it has now recommenced. This is something we always anticipated.

“The MFAA is engaged in regular discussions with ASIC and has supported aggregator members, where appropriate, through the planning of this BID monitoring activity. We look forward to the outcomes of ASIC’s review," she said.

Speaking more broadly on mortgage broker industry conduct, Pannek added that the introduction of BID and the Conflict Priority Rule in 2021 had strengthened the trusted relationships brokers have built with their clients.

“BID has supported the trust, choice, and competition that mortgage brokers bring to the home lending market, with resulting growth of broker market share now sitting at a record 76.8 per cent," she said.

"BID is well embedded across the industry and continues to deliver strong consumer outcomes — reflected in low complaint volumes.

“As an industry, we all recognise that compliance with regulation is the very foundation of our profession. As such, ongoing vigilance with regulatory obligations is non-negotiable.”

The managing director of the Finance Brokers Association of Australia (FBAA), Peter White, also said that this work had been anticipated, noting that the regulator had flagged to the association in January that this work was going to be reignited.

White told The Adviser that ASIC advised at that time the review was partly due to the increased market share that brokers now have - and "the potential compliance risk this might cause".