In response to recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, the Government announced it would introduce a best interests duty for mortgage brokers and reform mortgage broker remuneration. This consultation seeks stakeholder views on the exposure draft Bill, exposure draft Regulations and draft explanatory material that implements these reforms.
The exposure draft Bill requires mortgage brokers to act in the best interests of consumers when providing credit assistance. The bill and regulations make changes to mortgage broker remuneration by: requiring the value of upfront commissions to be linked to the amount drawn down by borrowers instead of the loan amount; banning campaign and volume-based commissions and payments; and capping soft dollar benefits. Furthermore, the regulations limit the period over which commissions can be clawed back from aggregators and mortgage brokers to two years and prohibit the cost of clawbacks being passed on to consumers. Entry into force of the reforms is scheduled for 1 July 2020.