iscover 
Industry associations, aggregators, brokers and technology platforms have backed the regulator’s push for stronger documentation, more effective file reviews and better oversight, but stressed that a broker’s expertise extends beyond the headline interest rate.
The review, which evaluated eight major aggregator groups covering two-thirds of all credit representatives, identified a number of potential issues with current best interests duty (BID) practice, including gaps in the documentation of higher-cost loan recommendations, weaknesses in complaints handling and concerns about the effectiveness of licensee oversight.
Associations welcome ASIC’s ‘roadmap’ but defend value beyond price
The Mortgage and Finance Association of Australia (MFAA) and Finance Brokers Association of Australia (FBAA) welcomed the regulator’s recognition that factors beyond cost can influence loan recommendations, while acknowledging the need for brokers to clearly document their reasoning.
MFAA CEO Anja Pannek said the review provided a “roadmap” for the industry to build on existing practices and strengthen consumer outcomes.
However, she said ASIC’s focus on the cost of individual loan recommendations needed to be considered alongside the broader role brokers play in driving competition and helping borrowers secure competitive home loans.
“Price absolutely matters. Consumers should have confidence that their broker has considered the available options and can clearly explain why a particular loan is in their best interests,” she said.
“At the same time, the lowest-cost loan is not necessarily the right loan for every borrower. Brokers play an important role in helping consumers compare lenders, negotiate on price and ensure their home loan remains competitive over time.”
FBAA CEO Leo Gagic also welcomed ASIC’s recognition that factors beyond pricing could influence a recommendation, arguing that brokers needed to consider individual borrower circumstances when assessing suitable loan options.
“Competitive pricing matters, and brokers will always consider it. But every customer has different circumstances, and a broker’s value comes from understanding those needs and helping them find an appropriate loan.”
He pointed to self-employed borrowers as an example of where a more expensive product could be appropriate, depending on their circumstances and the income documentation they could provide.
“It may not be the cheapest option, but it can enable them to secure a loan suited to their circumstances,” he said.
“Brokers help customers understand their options and weigh up the trade-offs. Clear explanations and strong documentation demonstrate the reasoning behind a recommendation, including why any additional cost is justified.”
Brokers challenge cheapest-loan focus and flag complaints ‘grey areas’
Finni brokers Eva Loisance and Costa Arvanitopoulos also questioned ASIC’s focus on the cheapest available loan, arguing that borrower circumstances can make price comparisons more complex.
Speaking on Broker Daily Uncut, Loisance and Arvanitopoulos said loan suitability depended on more than the headline rate, particularly when dealing with borrowers with complex circumstances.
“If everyone could just get the cheapest home loan online, you know, there’d be no need for the broker. Broker would not exist,” Loisance said.
“People want the cheapest option. We want to give them the cheapest option. Most of the time it’s not applicable for hundred different reasons.
“Sometimes we even refinance people onto more expensive options, but there’s always a reason behind it.
“I have never liked the idea of solely looking at the cheapest options, it ignores the nuance of why people come to brokers.”
Arvanitopoulos added that with a large proportion of his clients being investors, the right lender often mattered more than the lowest rate.
“You’re not always looking at the cheapest rate, you’re looking at a lender that can solve their problem,” he said.
“Because their structure is so different and unique or they need a certain policy, be that, you know, a maternity policy or you know, a casual income or you know, a trust structuring, something like that. It just makes no sense.”
On ASIC’s finding that 6.8 per cent of clients received only one loan option, Arvanitopoulos said this could reflect the borrower’s circumstances rather than the broker’s decision.
“I think a lot of those people in that 6.8 per cent would be because they’ve reached the end of their portfolio capacity, they’ve done everything they could and then there’s only one lender that’s available.
“To give some choice, what our aggregator has told us to do is to present three products from that same lender instead, so if there really aren’t many options, there is still some level of choice.”
On complaints, Arvanitopoulos said uncertainty remained around what needed to be reported and how and where to report it.
“It’s still a very grey area. You don’t always know what you need to report, what you don’t need to report, who to report it to or where and how,” he said.
Aggregators back ASIC focus on loan recommendations
Mortgage aggregators have backed ASIC’s focus on loan recommendation practices, with Connective, Australian Finance Group (AFG), Lendi Group and Loan Market Group (LMG) highlighting the need to balance pricing with individual borrower circumstances.
AFG CEO David Bailey said competitive pricing remained central to good broking but argued that the headline rate was only one consideration when assessing a suitable loan.
“A broker should be able to show every customer how they compared the market and why the loan they’ve chosen suits that customer’s needs and goals,” Bailey said.
“But a home loan is more than its headline rate. A broker’s job is to find a loan the customer can actually be approved for, on a time frame that works for them, with the features they need.”
Bailey said credit policy, borrowing capacity, product features and approval speed could all influence a lender recommendation, particularly when a borrower faced a fixed settlement deadline.
“When an approval is time-critical, such as a purchase with a fixed settlement date, the cost of a delay can be significant and won’t show up in a rate comparison. Missing settlement can mean penalty interest, extra costs and, in the worst cases, losing the property and the deposit,” he said.
However, Bailey acknowledged ASIC’s concerns about the quality of documentation supporting higher-cost recommendations.
“Where a broker recommends a loan that isn’t the cheapest, the reasons should be clear, documented and explained to the customer, and the bigger the price difference, the stronger that explanation needs to be. AFG will keep working with our brokers, and with ASIC, to make sure that happens consistently.”
Lendi Group CEO Sebastian Watkins also welcomed the review, saying it reinforced the importance of prioritising cost and demonstrating why a recommendation was in a customer’s best interests.
“We have high standards for meeting the best interests duty, supported by our platform, broker training, file reviews and centralised complaints handling,” Watkins said.
“ASIC’s report reinforces the importance of prioritising cost and clearly demonstrating why a recommendation is in each customer’s best interests, particularly where a higher-cost loan is recommended.”
LMG executive director and CEO Ewen Stafford said the BID remained the industry’s “greatest market differentiator” and should continue to guide brokers’ decisions.
“BID does not require recommending the cheapest loan in every instance, but higher cost requires higher evidence,” Stafford said.
He also said that effective complaint handling was a “must”.
“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.”
Connective group legal counsel Daniel Oh also said the best interests duty was about “understanding each client’s circumstances and recommending a loan that meets their needs”.
“Cost is a key consideration, alongside factors such as loan features, eligibility, and the ability to meet a settlement deadline. Where a higher-cost loan is recommended, brokers need to clearly demonstrate why it is in that client’s best interests.
“Our message to brokers remains consistent: document the reasons behind your recommendations, present a choice of suitable options wherever possible, and clearly explain the benefits and trade-offs to the client.”
Technology’s role in BID compliance
Salestrekker CEO and founder Dalibor Ivkovic said technology could play an important role in helping brokers and aggregators strengthen BID compliance.
“We welcome ASIC’s recommendations for strengthening best interests duty compliance and improving consumer outcomes.
“Salestrekker 2.0 already brings product comparisons, compliance notes, automatic auditing and workflow tools together to support this work.”
Ivkovic pointed to the platform’s Audit AI tool, which performs real-time file checks at lodgement, flags potential issues and gives aggregator partners visibility of submissions requiring closer assessment.
“The quality of the recommendation matters as much as the completeness of the file,” Ivkovic said. “Automatic auditing helps identify concerns earlier, so brokers and aggregators can focus their attention where it is needed.”
Oh also said Connective’s platform would continue to support brokers in meeting their BID obligations.
“Connective is continuing to invest in practical support for our members, including tools in Mercury Nexus, to help brokers meet their best interests duty.
“These tools support brokers’ judgement and documentation, with brokers remaining responsible for reviewing the information and ensuring it reflects their client’s circumstances.”
[Related: How does ASIC view the use of AI in broking?]
Want to see more stories from trusted news sources?Make Broker Daily a preferred news source on Google.
