- ASIC released a report – Mortgage brokers: Review of best interests duty and complaints handling practices
- It found areas that could be improved are communicating why loans are selected and how complaints are handled
- Price isn’t the only consideration when brokers recommend a loan
- This report provides a useful roadmap to continue to improve client outcomes and experience.
This week ASIC released a report, Mortgage brokers: Review of best interests duty and complaints handling practices. The report examined eight large mortgage broker groups, including Loan Market Group, with a focus on compliance with the best interests duty and consumer complaint handling.
The report found:
- Brokers did not recommend the cheapest loan option in more than 20% of cases.
- Complaints were not always resolved adequately or in a reasonable timeframe.
This report has provided a useful roadmap for the industry, highlighting ways we can continue to improve. It reinforces the value brokers bring to consumers in Australia where the best interests duty is the industry’s greatest market differentiator and our collective north star.
Cost is not the only consideration when a broker is recommending loan products and a good broker will make it clear why certain products were recommended, particularly over other potentially lower-cost options. This is something Loan Market has always taken seriously with a detailed Game Plan provided along with any recommendations to clients. We also acknowledge the findings of the report as areas to continue to evaluate and improve to ensure Australians feel confident in their financial decisions and have positive experiences with their broker.
Why cost isn’t the only consideration
Loans are not a one-size-fits-all product that simply come with different price tags. They have a range of nuances such as policy, approval timeframes, borrowing capacity, flexibility, structure and features. If a customer needs a fast turnaround time, they may be recommended a different product to someone who has more flexibility. Someone wanting an offset account may pay more fees, but this could potentially save them money in the long run.
It is the broker’s job to understand the product differences as well as the client’s circumstances to recommend the right options for them. The ASIC report highlights the need to provide clear documentation to explain the rationale behind the recommendations, and this is something we completely stand behind. Our goal is to empower Australians to take charge of their finances and feel confident in their decisions.
Complaint handling
Complaints and feedback handling makes a huge difference in customer satisfaction with a business. The ASIC report highlighted areas for improvement in the industry when it comes to complaints handling, which is something we take very seriously as an organisation.
As an industry, mortgage broking has a historically low complaint volume and a strong record of positive customer outcomes. Despite this, there is always room for growth and we will continue to look for ways to improve the process from identifying and recording complaints through to resolution.
You can read more about our feedback and complaints process.
Our key takeaways
Brokers provide considerable value to consumers in Australia with over 80% of home loans being written through one. With this comes high responsibility, and one we take very seriously. We are legally and morally driven by the best interests duty and continue to focus on improving financial literacy throughout the country. In this vein, we view ASIC’s findings as an opportunity to further strengthen our systems, processes and education to enhance customer outcomes and experiences.
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