ASIC Best Interests Duty for Mortgage Brokers in Australia: What Borrowers Must Know in 2026

In the March 2026 quarter, mortgage brokers settled a record 81% of all new residential home loans in Australia — a milestone that underscores just how central the broking profession has become to the way Australians access finance. With that dominance comes heightened regulatory scrutiny. The Australian Securities and Investments Commission (ASIC) has made mortgage broker conduct a primary enforcement priority for 2026, focusing specifically on compliance with the Best Interests Duty (BID) — the legal obligation that requires brokers to act in the best interests of their clients, not their own.

Understanding the Best Interests Duty

The Best Interests Duty was introduced on 1 January 2021 as part of the government's response to the Financial Services Royal Commission. It is enshrined in the National Consumer Credit Protection Act 2009 and applies to all mortgage brokers providing credit assistance to consumers.

ASIC's Regulatory Guide 273 (RG 273) provides the detailed framework for how the duty operates. At its core, the BID requires brokers to recommend products that objectively suit the consumer's financial situation, needs, and goals — not merely products that are "not unsuitable." This is a higher standard than the previous responsible lending framework.

The BID is accompanied by a Conflict Priority Rule, which requires brokers to prioritise the consumer's interests over their own or those of any third party — including lenders — when a conflict of interest exists. If a broker has a financial incentive to recommend a particular lender (such as a higher commission), that incentive must not influence the recommendation.

How ASIC Is Enforcing the BID in 2026

ASIC's approach to BID enforcement has evolved significantly in 2026. Rather than relying solely on reactive complaint-driven investigations, the regulator has shifted to a data-driven, proactive oversight model.

At the "Looking Ahead 2026" industry conference, ASIC officials confirmed they are actively analysing data from mortgage aggregators — the platforms through which most brokers operate — to assess the consistency and reasoning behind product recommendations. ASIC has implemented "data dictionaries" to ensure aggregators capture comparable information, allowing the regulator to compare recommendation patterns across the industry.

ASIC is specifically scrutinising the reasoning behind why brokers select particular lenders and products. A broker who consistently recommends the same lender regardless of client circumstances — or who cannot document why a particular product was chosen — faces a higher risk of regulatory action.

What ASIC Considers Non-Compliant

RG 273 makes clear that there is no "safe harbour" for BID compliance. ASIC has identified several practices that indicate non-compliance:

• Standardised outcomes — Processes that lead to the same product recommendation for all or most clients, regardless of individual circumstances, are at high risk of non-compliance.
• Inadequate documentation — Brokers who cannot demonstrate, through clear records, how a recommendation serves the client's best interests are vulnerable to enforcement action.
• Undisclosed conflicts — Failing to disclose commissions, volume bonuses, or other financial incentives that could influence a recommendation is a breach of both the BID and the Conflict Priority Rule.
• Lender panel concentration — Recommending products from a narrow panel of lenders without adequate justification may indicate that commercial relationships are influencing recommendations.

Understanding Clawback Provisions

One of the most misunderstood aspects of mortgage broker remuneration is the clawback provision. Understanding how clawbacks work — and what they mean for your relationship with your broker — is important for any borrower.

When a broker arranges a home loan, they typically receive an upfront commission from the lender (calculated as a percentage of the loan amount, commonly around 0.65%) and an ongoing trail commission (typically 0.15%–0.20% per annum on the outstanding loan balance). If the borrower refinances or discharges the loan within a specified period, the lender can "claw back" some or all of the upfront commission from the broker.

Under current federal regulations, clawback periods are capped at a maximum of two years. The standard industry schedule is:

• 0–12 months: 100% of the upfront commission is recovered by the lender
• 12–18 months: 50% is recovered
• 18–24 months: 25% is recovered

Critically, brokers are prohibited from passing clawback costs onto borrowers. Any attempt to charge a "clawback recovery fee" without a pre-disclosed, written fee-for-service agreement is a breach of the National Consumer Credit Protection Act.

Why Clawbacks Matter for Borrowers

Consumer advocates have raised concerns that clawback provisions can create a subtle conflict of interest: a broker who knows they will lose their commission if a client refinances within two years may be less inclined to proactively recommend switching to a more competitive loan. This concern is one reason ASIC monitors broker recommendation patterns so closely.

A broker who is genuinely acting in your best interests will advise you to refinance when it is in your financial interest to do so — even if it means they must repay their commission. If your broker has never discussed refinancing options with you, or seems reluctant to do so, it is worth asking why.

Common Mistakes Borrowers Make When Choosing a Mortgage Broker

Understanding the regulatory framework helps borrowers identify brokers who are genuinely committed to the BID — and those who may not be.

• Choosing a broker based on speed alone — A fast approval is not the same as the best loan. A compliant broker takes time to understand your full financial situation before making a recommendation.
• Not asking about the lender panel — Some brokers have access to 30 or more lenders; others work with a much smaller panel. A narrow panel limits your options and may indicate commercial relationships that influence recommendations.
• Ignoring commission disclosures — Brokers are required to disclose their commissions in a Credit Guide and Credit Proposal Disclosure document. Read these documents carefully and ask questions if anything is unclear.
• Assuming the broker's recommendation is always optimal — The BID requires brokers to recommend the best product for your circumstances, but it does not guarantee perfection. Doing your own research and asking your broker to explain why they chose a particular product is always worthwhile.
• Not reviewing your loan annually — Interest rates and lender offerings change. A good broker will proactively review your loan each year; if yours does not, consider whether they are truly acting in your best interests.

Australian Regulatory Context

Mortgage brokers in Australia must hold an Australian Credit Licence (ACL) issued by ASIC, or operate as a credit representative of an ACL holder. The ACL framework imposes obligations around responsible lending, disclosure, dispute resolution, and professional development.

The BID and Conflict Priority Rule are enforced by ASIC under the National Consumer Credit Protection Act 2009. ASIC has broad enforcement powers, including the ability to impose civil penalties, ban individuals from the industry, and pursue criminal prosecutions for serious misconduct. Since 2019, ASIC's oversight of the credit sector has resulted in numerous criminal convictions and the removal of individuals and companies from the industry.

Mortgage brokers are also required to be members of an ASIC-approved external dispute resolution scheme. The Australian Financial Complaints Authority (AFCA) is the sole approved scheme for financial services and credit complaints. If you have a complaint about your broker that cannot be resolved internally, you can lodge it with AFCA free of charge.

The 2026 regulatory environment has also been shaped by the introduction of AML/CTF Tranche 2 obligations, which extend anti-money laundering and counter-terrorism financing requirements to a broader range of professionals. For mortgage brokers, this means a more integrated compliance chain with allied professionals such as accountants and lawyers, with higher documentation and verification standards across the board.

Additionally, ASIC is investigating suspected AI-assisted document fraud in the mortgage sector — involving allegations of fabricated payslips and bank statements — which has prompted lenders to tighten verification processes and increase scrutiny of broker-submitted files. Borrowers should ensure all documentation they provide to their broker is accurate and complete.

Questions to Ask Your Mortgage Broker

These questions will help you assess whether a broker is genuinely committed to acting in your best interests under the BID.

• How many lenders are on your panel, and which ones do you most commonly recommend? — A broad panel and a varied recommendation history suggest genuine market access.
• Can you explain why you are recommending this particular lender and product for my situation? — A compliant broker should be able to articulate a clear, client-specific rationale.
• What commissions will you receive from the lender if I proceed with this loan? — This should be disclosed in your Credit Guide; ask for clarification if the figures are not clear.
• Do you receive any volume bonuses or other incentive payments from lenders? — These are potential conflicts of interest that must be disclosed and managed.
• What happens if I want to refinance within the first two years? — A transparent broker will explain the clawback implications without discouraging you from acting in your own interest.
• How will you review my loan over time to ensure it remains competitive? — Ongoing service is a hallmark of a broker who is genuinely committed to your long-term financial wellbeing.
• Are you an ACL holder or a credit representative, and who is your licence holder? — Understanding the licence structure helps you know who is ultimately responsible for the advice you receive.

How MyMoney® Can Help

In a market where brokers settle more than four in five new home loans, choosing the right broker has never been more important. The Best Interests Duty provides a legal framework for broker conduct, but the quality of service and the depth of market access vary significantly between professionals.

MyMoney® connects Australian borrowers with qualified, compliant mortgage brokers who are committed to acting in your best interests. Our platform makes it easy to compare brokers, review their credentials, and receive tailored proposals for your specific borrowing needs — whether you are buying your first home, refinancing, or investing in property.

Post a Brief on MyMoney® to describe your home loan requirements and receive competing proposals from experienced, ASIC-licensed mortgage brokers. Or Browse Mortgage Brokers on our platform to explore professionals who can help you navigate the 2026 lending landscape with confidence.

The right mortgage broker will document their reasoning, disclose their remuneration, and recommend the loan that is genuinely best for you — not the one that is best for them. MyMoney® helps you find that broker.