Aggregators look to future following BID guidance release

Building on the draft guidance released earlier this year, the 52-page final guide is high-level, principles-based guidance but does include several examples of how the duty – which comes into force on 1 January 2021 – applies in practice.

Following the release of the guidance, both the heads of the Finance Brokers Association of Australia (FBAA) and the Mortgage & Finance Association of Australia (MFAA) welcomed its publication.

Several heads of aggregation groups have also applauded ASIC on the guidance, outlining that training and compliance offerings will now ramp up to prepare brokers for their new obligations ahead of the January implementation date.

Choice response

Speaking to The Adviser, Choice Aggregation Services CEO Stephen Moore said that the guide “provides all of us with far greater clarity on what will be needed to meet the new legal obligations”.

He added that he was “particularly pleased to see [that] the industry’s extensive consultation with ASIC and government was clearly a valuable process”.

Mr Moore added: “Choice is already well progressed with the development of best interests duty processes and documentation, and we are confident we can work with brokers for a seamless transition well before the 1 January 2021 commencement date.”

PLAN response

Likewise, PLAN Australia CEO Anja Pannek encouraged “all brokers to take the time to read the guide, including the many useful examples provided”.

Ms Pannek told The Adviser: “At PLAN Australia we are well advanced with our BID Ready program, which includes extensive education, digital learning, platform enhancements and support to ensure our members are confident in meeting their obligations under the law. 

“We are entering a very important and exciting phase for our industry. Come 1 January 2021, brokers will, under law, be required to act in their customer’s best interests – this is a clear value differentiator for every Australian mortgage broker.”

The heads of Loan Market and Connective also outlined that they would be ramping up training and compliance offerings to brokers now that the final guidance has been released.

Loan Market response

Sam White, the executive chairman of Loan Market Group, said his initial review of the ASIC guidelines had been “positive, with no major surprises”. 

He continued: “It is also pleasing to have clarity from ASIC on some questions that were left unanswered, including around the importance of interest rate pricing when providing advice to customers and lender panel limitations. Further, the guidelines drive home the importance of note-taking and showing the reasoning behind your recommendations.”

Mr White said that the guidelines further cement the journey that Loan Market has been on to prepare for best interests duty (BID), including its process solution, The Loan Market Way, and its two new tech tools, Goal Setter and Game Plan.

Goal Setter is a digital meeting companion that supports face-to-face and video-call meetings and prompts the broker to ask the “right level” of requirement and objective questions to every customer, capturing their responses in MyCRM, while Game Plan is a tech-driven document that interacts with the GoalSetter and outlines the work the broker has completed for the customer and details their recommendations, before sending it to the client via eSign to digitally sign before they are ready to proceed.

“Based on the released ASIC guidelines, Loan Market will continue to roll out our BID-safe solution, The Loan Market Way, to our network via online training, small group sessions and one-on-one support and will be prepared well before the 1 January [introduction],” the Loan Market head said.

“The guidelines give us confidence that the work we have done to prepare our network is closely aligned with ASIC and supports the changes we have made to our process and technology to facilitate best customer outcomes.”

Connective response

Meanwhile, Mark Haron, the executive director of Connective, said the aggregator was “pleased to have clarity on what a best interests duty means for mortgage brokers”.

“We appreciate the effort ASIC has clearly made to incorporate industry feedback and allow the industry a full six months to adapt their practices appropriately,” Mr Haron said.

“The new BID guidelines are a good outcome for the industry, and we’re very confident our brokers are already in a great place to comply with them. Brokers may need to change some of their practices to implement these guidelines, and we encourage them to get a head start in adopting the principles, and not to wait until 1 January 2021 to implement any necessary changes.”

However, Mr Haron said the changes Connective brokers would need to implement are “subtle” and mainly focus on “expanding on steps that brokers already do”.

He outlined that Connective would be holding a webinar on 7 July to update its brokers on the new BID guidance and the incoming requirements.

“We’ll continue to support our brokers every step of the way to ensure they understand and can implement any necessary changes easily,” he said. 

“We’ve always supported putting customers’ interests first, and we’ve advocated that only subtle changes are necessary to existing practices of our brokers. We’re moving quickly now on assisting our brokers adopt those changes. 

“We’ll be putting finishing touches on compliance policies and procedures to ensure we’re implementing the changes ASAP and incorporating necessary changes into Mercury, Connective’s digital marketing and CRM platform,” Mr Haron concluded.

[Related: Associations welcome final BID guidance]