Mortgage brokers in Australia now have a legal obligation called Best Interest Duty to act in their clients' best interests. This duty came into effect on January 1, 2021 and requires brokers to prioritize clients' needs over other considerations and validate client-provided information. It is important for brokers to understand clients' requirements, provide multiple product and lender options with explanations, and ensure clients are fully informed every step of the process.
Mortgage brokers in Australia now have a legal obligation called Best Interest Duty to act in their clients' best interests. This duty came into effect on January 1, 2021 and requires brokers to prioritize clients' needs over other considerations and validate client-provided information. It is important for brokers to understand clients' requirements, provide multiple product and lender options with explanations, and ensure clients are fully informed every step of the process.
Mortgage brokers in Australia now have a legal obligation called Best Interest Duty to act in their clients' best interests. This duty came into effect on January 1, 2021 and requires brokers to prioritize clients' needs over other considerations and validate client-provided information. It is important for brokers to understand clients' requirements, provide multiple product and lender options with explanations, and ensure clients are fully informed every step of the process.
● Obligation for mortgage brokers to act in the best interest of clients
● BID officially came into effect on 1 Jan 2021 ● The idea of BID is to motivate clients to use brokers on their property transactions as brokers will have to operate under supreme Best Interest Duty when providing credit assistance to the clients which means that the brokers are legally required to act in the best interest and put the client’s interest first over anything else. ● Even Though the clients provide incorrect information in the Fact Find, brokers would be failing in the best interest obligation as it is important to validate any information through provided evidence. ● It is very crucial for the brokers to discuss the clients' needs and requirements before recommending the product and the lender so that both of them are on the same page. Clients should be explained why the recommended product and the lender is best fit for their transaction. ○ Minimum three options should be provided to the client highlighting the one that you have recommended. ● Interest rate should be considered as a key factor while making the recommendation. The client should be provided with enough detail explaining why that interest rate is in the best interest of the client. ● In meeting the Best Interest Duty, Loan Market requires brokers to hold a minimum of 20 lender accreditations. ● After 90 days, if the pre-approval expires, a new Game Plan is required. ● It is important to make sure that the client is fully informed and educated about each step in the life of a loan. ● Even after the submission, any subsequent document or information required by the lender must be updated within MyCRM before settlement. ● Conflict Priority Rule - “The conflict priority rule means that you must not recommend a product or service of a related party that would create extra revenue for yourself, your credit licensee or another related party, unless doing so would also be in the consumer’s best interests”.