Best Interest Duty is a statutory obligation for mortgage brokers to act in the best interest of consumers, and to prioritise consumers' interest when providing credit assistance.
Best Interest Duty impacts the following process used by mortgage brokers during the lending journey:
- Gathering information about the consumer. Mortgage brokers should gather relevant information to ensure they can provide recommendations that will be in the consumer's best interests.
- Assessing what is in the consumer's best interests. Mortgage brokers should consider products holistically to assess whether they are in the consumer's best interests. The factors and their relative importance will depend on the consumers' situation. Factors considered may include interest rate, fees and charges, or loan features.
- Presenting information and recommendations. Mortgage brokers should provide guidance and, where necessary, tailor how they present product options and recommendations to account for the consumer's knowledge, expectations and circumstances.
What does the Best Interests Duty mean for customers?
Mortgage brokers must now operate under Best Interests Duty when providing credit assistance to consumers.
This new duty offers customers peace of mind knowing that their mortgage broker is legally required to act in their best interests and put their interests first.
Did you know that the Best Interests Duty doesn't apply to banks?
As mortgage brokers, we act in your best interests when recommending a home loan, whereas a bank sells you only their products.
In other words, we must always act in your best interest; however, if a customer goes to a bank directly, then the bank can act in their own interests and not those of the borrower.
Looking for a home loan recommendation but don't know whom to trust?
Mortgage brokers are compelled to put your best interests first.