The Best Interests Duty bill has passed: what now?

by Madison Utley10 Feb 2020

Last week, the bill amending the Credit Act to require mortgage brokers to act in the best interests of consumers and which addressed conflicted remuneration for mortgage brokers was officially passed.

The Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers —2019 Measures) Bill 2019 confirms the 1 July 2020 date for the implementation of both new measures.

While Loan Market executive chairman Sam White is still hoping the regulators will provide further clarity, he has welcomed the confirmation of when the bill will come into effect as the group now has a cemented roadmap for the future.

"There is no doubt in my mind that the vast majority of brokers are operating in the best interest of their customers already and I believe no one needs to change their DNA to comply with this new law,” White said.

“What brokers do need to do is to translate what’s currently in their heads or on notepads, into a file that enables anybody to see that the broker has complied with, both the spirit and the letter, of this new law.

“This means process changes and changes to how we record our interactions with our customers.”

White believes there’s potential for significant positive change on a large-scale if the BID is viewed as an opportunity for true industry transformation.

“Our view is rather than layering new paint over old cladding, we need to strip back and take this opportunity to redesign our processes so that brokers can safely comply with the new law, whilst also increasing their efficiency,” he said.

"Loan Market is well underway on preparing our network for the introduction of Best Interests Duty (BID). We have been speaking to our brokers since last year about our BID-safe, time-saving, customer-focused process.”

“We are in the middle of a national roadshow explaining our approach to our brokers and have been delighted by the feedback we have received.”

According to White, Loan Market is committed to having 100% of its network, business owners, loan writers and customer service managers trained and ready for the 1  July date.