After a sufficient period of transition, mortgage brokers should be subject to and regulated by the law that applies to entities providing financial product advice to retail clients.
The Government agrees to introduce a best interests duty for mortgage brokers to act in the best interests of borrowers.
The best interests duty will not change the responsible lending obligations for broker originated loans, consistent with the Government’s response to Recommendation 1.1 above.
The Government also agrees that a breach of the best interests duty should be subject to a civil penalty.
The Government agrees, following the implementation of the best interests duty, to further align the regulatory frameworks for mortgage brokers and financial advisers.
This also responds to the Productivity Commission’s report Competition in the Australian Financial System, which also recommended imposing a best interests duty on mortgage brokers and a review of the feasibility of enabling financial advisers to also act as mortgage brokers.