Best Interest Duty

What is BID?
The best interests duty for mortgage brokers is a statutory obligation for mortgage brokers to act in the best interests of consumers, and to prioritise consumers’ interest when providing credit assistance. These obligations are collectively referred to as the best interests duty.
Based on the Royal Commission’s recommendations, it aims to align “consumers’ expectation and interest with that of the interest of the mortgage broker.”

BID works in conjunction with — and goes above and beyond — a mortgage broker’s existing responsible lending obligations (RLO) of assessing a product as ‘not unsuitable’. It requires mortgage brokers to act in the best interests of their customers and show evidence of this every time they provide credit assistance. Mortgage brokers must comply with both BID and RLO.

What are the goals of the best interests duty?
– Improve customer outcomes.
– Ensure mortgage brokers act in the best interests of their customers.
– Reduce potential for conflicts of interest to impact the assistance customers receive from brokers.

When can we expect to see Best Interest Duty come into effect?
At In Financial Services we aim to act in our customers best interest at all times to build a meaningful life-long connection with all our clients/customers. Additionally, for customers peace of mind, the Best Interest Duty legislation has been passed as a law and will come into effect as of January 1st, 2021.

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