ASIC has published Report 840 Mortgage brokers: Review of best interests duty and complaints handling practices (REP 840) which examined 13 credit licensees that make up eight large mortgage broker groups. It looked at how they ensure their credit representatives comply with the mortgage broker best interests duty and consumer complaints.
Its recommendations cover policies and tools for making loan recommendations, monitoring and supervision of credit representatives, and complaints handling and the best interests duty including:
* Licensees should ensure they can readily identify loan recommendations with limited or no recorded rationale and that are not for the cheapest loan compared.
* Licensees should ensure their systems capture accurate information relevant to loan recommendations, including lender discounts, promotional offers, cashbacks and lender timeframes for processing loan applications.
* Licensees should expect their representatives to provide additional evidence and justification when recommending a loan that will cost more than other available options.
* Licensees should ensure they have internal guidance and training materials, particularly for complex or challenging lending scenarios.
* Licensees should ensure adverse review findings are followed up and addressed with individual brokers and any consumer detriment is remediated, and consider whether findings reflect broader compliance issues.
* Licensees should improve how they identify complaints and ensure accurate IDR data is reported to ASIC.
* Unless a complaint is genuinely withdrawn by the complainant, licensees should respond to all complaints in a manner that is consistent with the requirements of RG 271.
* Licensees should regularly assess how their IDR processes are performing, including potential missed or unreported complaints arising from brokers interacting directly with consumers compliance with timeframe and notification requirements in RG 271.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
