Insight

The mortgage broker best interests duty: what it means for you, and what ASIC found in 2026

October 22, 2026
A row of grey filing cabinets in an empty office with one drawer slightly open

Most Australians who take out a home loan now do it through a broker. ASIC says “more than 80% of home loans are now arranged through mortgage brokers” (ASIC 26-240MR, 13 October 2026). That influence comes with a legal duty: when a broker recommends a home loan, they must act in your best interests. This guide explains where the duty came from, what it requires, where it stops, and what ASIC’s October 2026 review found when it tested how the industry applies it.

Why the duty exists

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry examined mortgage broking. Its final report, released on 4 February 2019, included Recommendation 1.2 (a best interests duty) and Recommendation 1.3 (broker remuneration) (ASIC RG 273.1).

The government responded with the Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Act 2020, which inserted the new obligations into the National Consumer Credit Protection Act 2009 (the National Credit Act) along with some remuneration reforms (RG 273.2). Parliament passed it in February 2020 (ASIC 20-146MR, 24 June 2020). Brokers had to comply from 1 January 2021. ASIC gave a temporary six-month exemption from 1 July 2020 because of COVID-19 (RG 273.4).

What the duty requires

There are two obligations, together called the “best interests obligations” (RG 273.2–273.3):

  • The best interests duty. A mortgage broker must act in your best interests when providing credit assistance, such as suggesting or helping you apply for a loan.
  • The conflict priority rule. If there is a conflict between your interests and the broker’s, or their licensee’s or a related party’s, the broker must give priority to yours.

The legislation explains the aim simply: to improve consumer outcomes, first by requiring brokers to act in their clients’ best interests, and second by reducing the potential for conflicts of interest to affect the advice consumers receive (quoted at RG 273.3). In practice ASIC expects a broker to understand your objectives, consider a range of options, and keep records that explain why the recommended loan suits you. Where a lower-cost option exists, ASIC expects a clear reason why the recommendation still delivers more value for your circumstances.

What it doesn’t cover

The duty applies only to credit regulated by the National Credit Act. That is credit for personal, domestic or household purposes, or to buy or improve residential investment property (RG 273.5). Business loans, development finance and most commercial facilities fall outside it. That is why Siare’s home loans page keeps regulated consumer lending separate from the business and development finance we arrange: different law applies to each.

Responsible lending obligations also sit in the National Credit Act. Lenders and brokers must make reasonable inquiries about your requirements, objectives and financial situation, take reasonable steps to verify it, and assess whether the loan is “not unsuitable” for you (ASIC RG 209).

How brokers are paid, and what happened to the trail ban

Most brokers are paid by the lender: an upfront commission when the loan settles and, usually, an ongoing trail commission while it stays on the lender’s books. If a broker charges you a fee directly, it has to be disclosed to you first.

The trail question was contested. The Productivity Commission’s 2018 report said “trail commissions should be banned and clawback of commissions from brokers restricted”, and that everyone delivering home loans should have “a clear legally-backed best interest obligation” (Productivity Commission, 2018). In March 2019 the government decided not to adopt the Royal Commission’s recommendation to scrap trail commissions on new loans. It said it would review them in three years instead (The Sydney Morning Herald, 12 March 2019). The best interests duty went ahead, and it is now the main legal protection against commission-driven recommendations.

What ASIC’s 2026 review found

On 13 October 2026 ASIC released Report 840. It covered 13 credit licensees in eight large aggregator groups, which together are responsible for about two-thirds of mortgage broker representatives in Australia. It used data from 1 April 2023 to 31 March 2025 (ASIC 26-240MR). The groups reviewed included Connective Credit Services, the licensee Siare’s consumer credit services are authorised under.

ASIC described its key findings across the groups as follows:

  • Broker practices “generally aligned” with ASIC’s guidance, but recommendation practices, supervision and complaints handling could be strengthened.
  • Seven of the eight groups reported that brokers did not recommend the cheapest loan option in more than 20% of cases. ASIC accepts there can be good reasons for this, such as features you value. But it found cases with no clear evidence supporting a more expensive recommendation.
  • Complaints about the best interests duty took longer to resolve than other complaints. ASIC found complaints “being missed, withdrawn without being fully investigated, or delayed”.

ASIC’s message to licensees was direct: “The greater the cost difference, the stronger the evidence needed to show the recommendation is in the consumer’s best interests.”

A worked example of what “best interests” looks like on a file

Say you are refinancing a $600,000 loan. Option A is the lowest rate on the broker’s panel, with no offset account. Option B costs 0.15% a year more, about $900 a year on the opening balance, but has a full offset account. If you keep about $60,000 in savings, the offset could reduce your interest by more than the higher rate costs. Then B can be in your best interests. If you don’t keep savings, it probably isn’t. Either way, the reasoning should be written down and explained to you before you choose. That is the standard ASIC’s review is pushing the industry towards.

Your other protections

  • Credit Guide. Before giving credit assistance, a broker should give you their Credit Guide, which explains who they are, their licence and how they are paid. Ours is part of our compliance documents.
  • Internal dispute resolution. Every licensee must have a complaints process. ASIC’s RG 271 sets the standards, and REP 840 says complaints handling needs to improve.
  • AFCA. If a complaint isn’t resolved, you can take it to the Australian Financial Complaints Authority. AFCA began on 1 November 2018 and replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal (ASIC, Dispute resolution). See our complaints and dispute resolution page.

Questions to ask your broker

  1. How many lenders did you compare for me, and why these ones?
  2. Was this the cheapest suitable option? If not, what am I getting for the extra cost, in dollars?
  3. How are you paid on this loan, upfront and trail, and do you receive anything else from this lender?
  4. Can I have a written summary of why you recommended this loan?
  5. Who is your licensee, and how do I complain if something goes wrong?

A good broker will welcome these questions. They are also the questions ASIC now expects licensees to be able to answer from the file.

Frequently asked questions

Does the best interests duty apply to my business or development loan?

No. It applies only to credit regulated under the National Credit Act, mainly home loans and residential investment loans for individuals.

Does the duty mean a broker must recommend the cheapest loan?

No. But if they recommend a more expensive loan, they need a clear, documented reason why it is better for you. ASIC’s 2026 review focused on exactly that.

Are brokers still paid trail commissions?

Yes. The government decided in 2019 not to ban trail commissions on new loans, and the best interests duty and conflict priority rule now apply instead.

What can I do if I think a recommendation wasn’t in my interests?

Complain to the broker’s licensee first. If it isn’t resolved, you can take it to AFCA.

General information only. It is not credit assistance, financial product advice, legal advice or an offer of finance, and it does not take account of your objectives, financial situation or needs. Siare’s consumer credit services are provided by Site Solutions (VIC) Pty Ltd, Australian Credit Representative Number 526276, authorised by Connective Credit Services Pty Ltd, Australian Credit Licence 389328.

Related reading

Sources

  1. ASIC, 26-240MR ASIC review finds room for improvement in mortgage brokers’ best interests duty practices, 13 October 2026. https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2026-releases/26-240mr-asic-review-finds-room-for-improvement-in-mortgage-brokers-best-interests-duty-practices (accessed 22 October 2026).
  2. Australian Securities and Investments Commission (ASIC), Report 840 Mortgage brokers: Review of best interests duty and complaints handling practices (REP 840), 13 October 2026. https://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-840-mortgage-brokers-review-of-best-interests-duty-and-complaints-handling-practices (accessed 22 October 2026).
  3. ASIC, Regulatory Guide 273 Mortgage brokers: Best interests duty (RG 273), issued 24 June 2020. https://www.asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-273-mortgage-brokers-best-interests-duty (accessed 22 October 2026).
  4. ASIC, 20-146MR ASIC publishes new regulatory guidance for mortgage brokers, 24 June 2020. https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-146mr-asic-publishes-new-regulatory-guidance-for-mortgage-brokers (accessed 22 October 2026).
  5. ASIC, Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209), issued 9 December 2019. https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-209-credit-licensing-responsible-lending-conduct/ (accessed 22 October 2026).
  6. Productivity Commission, Competition in the Australian Financial System (Inquiry Report No. 89), released 3 August 2018. https://www.pc.gov.au/inquiries-and-research/financial-system/report/ (accessed 22 October 2026).
  7. The Sydney Morning Herald, Government ditches Hayne recommendation on mortgage broker pay, 12 March 2019. https://www.smh.com.au/business/banking-and-finance/government-ditches-hayne-recommendation-on-mortgage-broker-pay-20190312-p513lp.html (accessed 22 October 2026).
  8. ASIC, Dispute resolution, current page. https://www.asic.gov.au/regulatory-resources/financial-services/dispute-resolution (accessed 22 October 2026).