Best interests duty delayed by six months

by Madison Utley11 May 2020

Following the government’s announcement of a six-month deferral to the implementation of commitments associated with the royal commission on Friday afternoon, ASIC confirmed that mortgage broker best interest duty and remuneration reforms were among the measures which have been postponed.

The commencement date for the mortgage broker reforms has been delayed until 1 January 2021.

While ASIC deferred the start date to enable industry participants to focus on “immediate priorities” like the needs of their customers during this difficult stage, the regulator clearly stated it expects relevant parties will continue to actively prepare for the incoming change even with the extended timeline.

ASIC released the draft guidance around best interests duty on 20 February 2020 into a one-month consultation phase; working off the feedback received over the period, ASIC is aiming to release the final guidance on the reform by mid-2020, “in response to industry requests for that guidance to be finalised as soon as possible”.

The government's broad, updated timetable for the royal commission recommendation implementation has all measures which would be introduced into parliament by 30 June 2020, now to be introduced by December 2020; similarly, the measures scheduled for introduction by December 2020 have been pushed back to 30 June 2021.

The decision aimed to strike a balance between the need to implement the recommendations and the need to ensure Australia’s financial institutions are in a position to devote their resources to responding to the significant challenges posed by COVID-19.  

To date, the government has implemented 24 commitments from the royal commission and has substantially progressed a further 35 through consultation and the preparation of draft legislation.