Joint Consumer Submission to ASIC – CP327 Implementing the Royal Commission recommendations: Mortgage brokers and the best interest duty

In October 2019, CCLSWA make joint submissions to Treasury supporting mortgage broker best interest duty and remuneration reforms.

In January 2020, the Federal Government passed legislation to create a duty for mortgage brokers to act in the best interests of consumers and, where there is a conflict, to prioritise the consumers interest when providing credit assistance. The new obligations will be effective from 1 July 2020.

In February 2020, ASIC sought submissions on its draft guidance about the new best interest duty for mortgage brokers, and in March 2020, CCLSWA joined again with CHOICE, Consumer Action Law Centre, Financial Counselling Australia and Financial Rights Legal Centre to provide submissions to ASIC supporting the draft guidance and recommending areas where the guidance can be strengthened to ensure brokers are acting in the best interests of borrowers. In particular we recommended ASIC:

  • mandate that when a broker recommends a bundled home loan package with other
    credit products, all individual credit products must satisfy the best interests duty;
  • clarify that a broker must always present a person with the lowest cost option on the market; and
  • provide an illustrative example of when a broker satisfies the responsible lending obligations but fails to adhere to the best interests duty.

The joint consumer submission made a total of 15 recommendations. To see all our recommendations and read the submission in full, click here.

 

 

 

Michael Duncan