The industry has broadly welcomed ASIC’s finalised regulatory guidance to assist in the application of the new best interests duty (BID) for mortgage brokers, which comes into effect on 1 January 2021.
The MFAA responded to Regulatory Guide 273 (RG 273) optimistically, highlighting the amendments which had been made from the draft version.
“Whilst we are still working through the detail, we believe the changes have strengthened and clarified the guidance on broker obligations and the manner in which compliance with the new legislation will be assessed,” said MFAA CEO Mike Felton.
“We acknowledge that cost must be a key element of a suitable mortgage product, but it is not the only factor. This guidance provides greater acknowledgment that other elements such as features, urgency of required approval and the customer’s credit profile can also be important factors when assessing the appropriateness of a lender and product.”
The MFAA is currently finalising its ‘Comprehensive Education Resource’ for members which will be released in the coming weeks.
Mortgage aggregator Connective also dubbed RG 273 a “positive outcome” for the industry.
“We’re pleased to have clarity on what a best interests duty means for mortgage brokers and we appreciate the effort ASIC has clearly made to incorporate industry feedback and allow the industry a full six months to adapt their practices appropriately,” said Connective director Mark Haron.
“ASIC has emphasised a need for brokers to show customers the product comparisons that they’ve done and help customers understand the options that were considered.
“However, brokers don’t have to list why they didn’t recommend certain lenders and products and don’t have to consider lenders or products that brokers aren’t accredited with,” he explained.
“The changes our brokers need to implement are subtle and are really around expanding on steps that brokers already do. We’ll continue to support our brokers every step of the way to ensure they understand and can implement any necessary changes easily.”
Connective plans to put the finishing touches on its compliance policies and procedures as soon as possible, to ensure the changes are implemented for its broker network with time to spare.
PLAN Australia not only welcomed the release, but CEO Anja Pannek encouraged all brokers to take time to actually read through the guide and educate themselves with the “many useful examples” included.
“At PLAN Australia, we are well advanced with our BID Ready program, which includes extensive education, digital learning, platform enhancements and support to ensure our members are confident in meeting their obligations under the law,” she added.
Choice Aggregation Services
For Choice CEO Stephen Moore, RG 273 delivered “far greater clarity” around BID than previously supplied and he remains confident the group can work with brokers for a “seamless transition” well before the 1 January 2021 commencement date.
“We are particularly pleased to see the industry’s extensive consultation with ASIC and Government was clearly a valuable process,” he said.
Loan Market Group
Loan Market executive chairman Sam White echoed the sentiments of both Pannek and Moore, expressing complete confidence the group is positioned to have its brokers more than ready by the time the duty goes into effect.
“Based on the released ASIC guidelines, Loan Market will continue to roll out our BID-safe solution, The Loan Market Way, to our network via online training, small group sessions and 1:1 support and will be prepared well before the January 1 legislation,” White said.
“It is also pleasing to have clarity from ASIC on some questions that were left unanswered including around the importance of interest rate pricing when providing advice to customers and lender panel limitations.
“Further, the guidelines drive home the importance of note-taking and showing the reasoning behind your recommendations. All of which we have built into The Loan Market Way time-saving tech like the Goal Setter and Game Plan.”