Few pieces of broking industry research have been as anticipated as the Australian Securities and Investments Commission’s (ASIC) long-awaited review of the industry’s compliance with the best interests duty (BID).
The final report, Mortgage brokers: Review of best interests duty and complaints handling practices, marks the culmination of a multi-stage review that began in mid-2025, examining 13 Australian credit licensees across eight major aggregator groups and representing around two-thirds (66 per cent) of credit representatives nationwide.
In many ways, it’s the first real opportunity the regulator has had to take stock of the behaviours the scheme is driving, given BID only came into effect in 2021.
And while the report may have lacked that big “gotcha” moment, it offers some insights into where the industry stands and what should happen next.
What did the report find?
Overall, if the review represented a test, the industry received a pass mark, albeit with several slight caveats identifying areas for improvement.
The regulator acknowledged that licensees generally had frameworks in place to support compliance with their legal obligations and found no evidence of brokers steering clients towards lenders offering higher commissions.
But there were three areas in particular where ASIC felt brokers could be doing better:
1. Strengthening processes for ensuring brokers comply with BID, particularly when recommended loans are significantly more costly than other options available to the consumer.
2. Developing more mature complaints handling and internal dispute resolution practices.
3. Enhancing systems and data for overseeing representatives, monitoring credit assistance quality, and identifying potential conduct risks.
The first finding drew most attention in the mainstream media, with ASIC identifying room for improvement in cases where the expected costs of a recommended loan were “significantly higher than other loans available”.
In particular, ASIC flagged that it felt more detailed and personalised evidence was needed to justify loan recommendations when the cheapest loan wasn’t recommended to the borrower, noting that some file reviews exposed deficiencies in record keeping, such as generic justifications, boilerplate language, and a lack of detailed cost comparisons.
Complaints handling emerged as another area of concern.
ASIC found internal dispute resolution (IDR) complaints were underreported by broker representatives to licensees and by licensees to the regulator.
The regulator also noted that compliance appeared stronger when complaints were handled directly by licensees than when broker representatives managed them.
ASIC’s review identified several shortcomings, including insufficient resources to investigate complaints, delays in compensation payments, missed response deadlines, and mandatory information being omitted from responses to consumers.
In some cases, complaints were even incorrectly recorded as withdrawn before they had been fully investigated, according to the regulator.
As such, ASIC recommended that licensees regularly assess their IDR processes, improve complaint identification, and ensure accurate reporting to the regulator.
ASIC found some audits focused on procedural requirements, such as checking whether documents had been uploaded, rather than assessing the quality of brokers’ recommendations.
The review also found weaknesses in how licensees followed up adverse audit findings.
In some cases, follow-up was limited to requesting missing documents, without further investigation into potential compliance issues or whether consumers had suffered detriment.
ASIC recommended that licensees address individual findings, remediate any consumer harm, and consider whether issues pointed to broader compliance risks.
Data quality was another area of concern for ASIC, particularly around remuneration.
While brokers generally appeared to receive similar commissions for standard home loans, with no evidence of favouring higher-paying lenders, information on commission splits and clawbacks was not always easy to retrieve.
ASIC also found gaps in historical product and application-outcome data, making it harder for licensees to monitor broker conduct and assess whether recommendations matched the loans that ultimately settled.
The regulator warned that a lack of visibility could potentially weaken broker supervision, noting that recommendation records alone did not provide the full picture.
“If licensees cannot access timely and complete data about outcomes of loan applications, they cannot use that information to supervise individual brokers,” ASIC says.
Industry responds
The review received broad support from industry associations in its immediate aftermath, with the bodies acknowledging that it identified practical areas for improvement.
Mortgage and Finance Association of Australia (MFAA) chief executive Anja Pannek says the review gave the industry a roadmap for the immediate future.
“It recognises the foundations already in place, while being clear about where brokers, aggregators and licensees can continue to strengthen practices and consumer outcomes,” she says.
“Our members are at the centre of this. They are the people sitting across the table from Australians every day, understanding their circumstances and helping them navigate one of the biggest financial decisions of their lives.
“Our job is to make sure members understand what these findings mean in practice, have the guidance and education they need, and that their experience continues to inform our engagement with ASIC.”
Meanwhile, Finance Brokers Association of Australia (FBAA) chief executive Leo Gagic says the report highlighted the role brokers play in driving the best outcome for clients.
“As I’ve said before, compliance cannot be viewed as a standalone function or a simple box-ticking exercise. Growth, risk, compliance, governance, and customer outcomes need to be considered together and embedded in how a business operates,” he says.
“This is about building trust, professionalism, and long-term sustainability, alongside meeting regulatory obligations.
“The FBAA remains committed to supporting members through education, professional development, advocacy and practical business support, helping brokers build sustainable businesses and deliver good outcomes for their customers.”
Both association heads also stressed that the cheapest loan is not necessarily the best option for every borrower.
“Price absolutely matters. Consumers should have confidence that their broker has considered the available options and can clearly explain why a particular loan is in their best interests,” Pannek says.
Gagic echoed this view, noting that brokers must weigh up pricing alongside each customer’s individual circumstances.
“Competitive pricing matters, and brokers will always consider it,” he says.
“But every customer has different circumstances, and a broker’s value comes from understanding those needs and helping them find an appropriate loan.”
What’s next?
ASIC’s review provides an important benchmark for the industry, but its longer-term value will depend on whether the shortcomings identified lead to stronger oversight, clearer evidence of compliance and better outcomes for borrowers.
For an industry built on trust, demonstrating that the best interests duty works in practice may ultimately matter more than simply having the right processes on paper.
ASIC commissioner Alan Kirkland acknowledged the critical role brokers play in helping Australians make “one of the most significant financial decisions of their lives”, while emphasising the responsibility that comes with this position.
“More than 80 per cent of home loans are now arranged through mortgage brokers,” he says.
“With that level of influence comes an obligation to act in consumers’ best interests when recommending a loan.”
