BID report provides LMG brokers new blueprint for best practice
The Best Interests Duty (BID) remains the mortgage broking industry’s greatest market differentiator and must continue to serve as our collective north star.
Following the release of ASIC’s Mortgage brokers: Review of best interests duty and complaints handling practices report, LMG believes the findings clearly reinforce the immense value brokers consistently bring to Australian consumers, who rely on brokers for more than 80% of home loans.
Brokers are required to assess a client’s needs, objectives, and financial situation, then recommend a credit product that serves those interests. You are legally bound to act in the customer’s best interests and to prioritise those interests above your own.
Our stance remains that brokers act as genuine advocates for clients. BID is what builds deep trust in the broking channel and protects Australian consumers from ending up with loans that do not suit their personal circumstances.
We support the view of the Mortgage & Finance Association of Australia (MFAA), whose CEO Anja Pannek said “ASIC’s review gives our industry a roadmap.”
“It recognises the foundations already in place, while being clear about where brokers, aggregators and licensees can continue to strengthen practices and consumer outcomes.”
You can view the MFAA’s statement here and their FAQs here.
Cost can’t be only consideration
While the report highlights product cost as a primary consideration, this is not the sole factor in determining the right outcome for every client. A higher-cost loan may be the only option that delivers critical features, such as offset functionality, debt consolidation, or enables the client to meet a tight settlement timeline.
BID does not require recommending the cheapest loan in every instance, but higher cost requires higher evidence. The ASIC Report emphasises that when you recommend a product that is not the cheapest option, the quality and clarity of the documented rationale are critical to evidence that you have complied with BID and recommended the best product for client’s specific needs.
Effective complaint handling a must
ASIC’s report also placed significant focus on Internal Dispute Resolution under RG 271. Receiving feedback or a complaint is a normal part of business. Effective complaints handling protects both your clients and your business reputation.
ASIC observed that complaints managed centrally through aggregator support teams achieve better outcomes and avoid missed deadlines. You don’t need to be a dispute resolution expert: when an issue arises, simply notify our complaints team, and we will guide you through the process and ensure required disclosures are issued correctly.
A commitment to continuous improvement
As an industry leader in compliance and technology, we view ASIC’s findings as an opportunity to further strengthen our systems, data tools, and broker education. We will continue to analyse the details of the report and engage directly with ASIC and our broker community.
If we introduce new platform enhancements or updated guidance to help simplify your compliance workflow, you’ll be the first to know.
Thanks for your ongoing commitment to putting your clients’ best interests’ at the heart of everything you do.
