The Australian Securities and Investments Commission has released its official guidance on the application of the best interests duty on mortgage brokers.
The ASIC guidance, Regulatory Guide 273 Mortgage brokers: Best interests duty (RG 273), is designed to assist in the application of the new best interests duty for brokers which kicks in in January next year.
The principles-based guidance comes off the back of the Hayne Royal Commission and stops short of prescribing minimum standards of conduct or imposing new obligations.
In the guidelines, ASIC expects brokers to uphold the following standards:
- Assess what products and credit would be in each consumer’s best interests
- Use their judgement when deciding what is in the consumer’s best interests and in some cases this may include challenging the consumer’s perception of their own best interests
- Take a holistic approach to products and weigh up the relevant factors based on the value and benefits they offer
- Present more than one option to consumers and where there’s multiple options, present them in a way that is consistent with the consumer’s best interests
- Keep evidence of compliance with the best interests obligations
Upon release of the guidelines ASIC commissioner Sean Hughes said they were important and timely reforms for the mortgage broking industry.
“This reform was legislated by the Parliament to improve the quality of credit assistance provided to consumers,” he said.
“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.”
Mr Hughes said the guidelines were being released now to give industry enough time to prepare before the best interests duty commences in January.