The Australian Securities and Investments Commission reviewed 13 credit licensees across eight large mortgage broker groups and found that their practices generally aligned with its guidance, but did not always demonstrate consistently that home loan recommendations were in customers’ best interests. ASIC called for stronger evidence supporting loan choices, closer licensee supervision and more effective complaints handling. Seven of the eight aggregator groups reported that brokers recommended a loan other than the cheapest option in more than 20% of cases. Higher cost loans may offer features that provide greater value, but ASIC found instances where brokers lacked clear evidence for their recommendations. Licensees should monitor such recommendations closely, with stronger evidence expected as the cost difference increases. The review also found that best interests duty complaints took longer to resolve than other complaints, with some missed, withdrawn without full investigation or delayed. ASIC expects licensees to address these gaps and improve their use of data to identify conduct risks and strengthen complaints reporting.
Australian Securities and Investments Commission identifies gaps in mortgage broker recommendations, supervision and complaints handling
The Australian Securities and Investments Commission found that mortgage brokers need to better substantiate higher cost home loan recommendations and that licensees should strengthen supervision. Seven of eight aggregator groups reported that brokers did not recommend the cheapest option in more than 20% of cases. ASIC also identified delayed or inadequately investigated complaints about the best interests duty.