Late in the afternoon on Friday, 8 May, ASIC announced that the mortgage broker best interest duty (BID) and remuneration reform were among the royal commission measures which have been deferred for six months.
The industry has unanimously welcomed the decision, but several key players are clamouring for more clarity around when the final regulatory guidance can be expected, as its release is crucial for the additional preparation time to be put to the best use.
According to MFAA CEO Mike Felton, ASIC’s announcement shows the government recognises the important role brokers play in Australia, especially during this period of economic uncertainty and widespread anxiety.
Felton explained that brokers are currently directing the bulk of their energies towards assisting vulnerable customers and keeping abreast of the frequent changes to processes and lender policies.
“This has placed pressure on resources which, coupled with the non-availability of the final Regulations and Regulatory Guidance, has severely complicated our industry’s ability to comply with a 1 July 2020 start date,” he said.
“We are delighted [the government] has taken a decision to prioritise the support brokers provide to their customers and to allow industry additional time to comply.”
While the FBAA also celebrated the decision as “a welcome and necessary” move, managing director Peter White AM has called on ASIC for further clarification around when the final guidance will be introduced, rather than the vague “mid-2020” goal for which the regulator has said it's aiming.
“Given the regulatory guide was due in May, we need some clarity from ASIC as to when it will be out, as ‘mid-2020’ is subjective,” said White.
Once the guidance is published, the FBAA plans to conduct a series of education and compliance training to help its members be fully prepared for implementation.
Connective executive director Mark Haron reiterated several times over that the majority of brokers already act in their customers' best interests, but he welcomed the additional time to prepare for the formal launch of the duty nonetheless.
“However, while delaying gives us time to focus on customers, that 30 December deadline is going to come along fairly quickly, so the sooner we start moving on this, the better,” he said.
“Connective, and a lot of other aggregators, are waiting on the final version of the regulatory guidance to come out before we put the finishing touches to system and documentation changes, and provide the further ongoing training brokers need.”
Haron expects the final regulation to be a “bit more prescriptive” than where Treasury landed in the draft version, and for it to address the topics of concern raised by the industry such as personal lending, credit cards and to what degree brokers are responsible for being familiar with lenders not on their aggregator’s panel.
But, for now, brokers can continue to support and focus on their customers.
“They don’t have to rush into retraining and updating of systems and the other things they would have been doing right now getting ready to make sure they’re 100% comfortable in meeting their BID requirements,” said Haron.
Loan Market also embraced ASIC’s extension to the royal commission reforms, grateful for the extra time to get its time-saving process ‘The Loan Market Way’ up and running nationwide.
“Despite the timing being extended, Loan Market will forge ahead with our rollout which will begin on Monday across Australia,” said executive chairman Sam White.
"But we welcome the opportunity to do more coaching and training with our brokers rather than meet a deadline that was always very ambitious.”
According to PLAN CEO Anja Pannek, the decision to postpone the introduction of BID will help provide relief to the mortgage brokers who have been “working tirelessly” to support Australians over the past two months.
“Our members’ priority has been in assisting customers to manage their financial position, and this deferral will go some way towards alleviating the additional pressure that comes with a change in regulation,” she said.
“We will continue to keep our members up-to-date with everything they need to know and need to implement in preparation for when BID goes ‘live’.
“We remain focused on supporting our brokers so they can continue to build their businesses and their value proposition around the customer.”