Compliance note: Information only, not legal or financial advice. Confirm your Best Interests Duty obligations with ASIC, RG 273, or a qualified professional before relying on this for compliance decisions.
The Best Interests Duty (BID) is the statutory obligation on mortgage brokers and other credit assistance providers to act in the consumer's best interests when providing credit assistance, and to prioritise the consumer's interests where they conflict with the broker's. It sits in Part 3-5A of the National Consumer Credit Protection Act 2009 and has applied since 1 January 2021.
The duty was introduced by the Financial Sector Reform (Hayne Royal Commission Response, Protecting Consumers (2019 Measures)) Act 2020, implementing recommendation 1.2 of the Hayne Royal Commission. ASIC's commencement announcement frames the obligation as "a statement of principle which seeks to align the interests of the mortgage broker with the interests and expectations of the consumer." Commencement was originally scheduled for 1 July 2020, then deferred by ASIC to 1 January 2021 to reflect the operational disruption of COVID-19.
Two obligations sit at the core. The first is the duty itself: to act in the consumer's best interests when providing credit assistance. The second is the conflict-priority rule: when the consumer's interests conflict with the broker's, the broker, an aggregator or another related party, the broker must prioritise the consumer. The two together close the gap the Royal Commission identified, where a broker could legally recommend a product that suited the broker's commission structure rather than the borrower's situation.
ASIC publishes its assessment framework in Regulatory Guide 273 (RG 273), released 24 June 2020. The Guide names the factors ASIC weighs when assessing compliance: the consumer's objectives, requirements and financial situation; the range of products considered; the basis for the recommendation; and the broker's documented handling of any conflict. The duty is principle-based, not a checklist, what conduct satisfies it depends on the individual situation.
For a Melbourne mortgage broker, the practical implication is the documentation trail. Recommendations need to evidence why a particular product met the consumer's stated objectives, what alternatives were considered, and how any conflict was identified and managed. Aggregator software does most of this now, but ASIC's enforcement actions consistently turn on whether the documentation supports the recommendation, not on whether the recommendation itself was sound. The duty applies to credit assistance, the act of suggesting or arranging a credit product, not to the lender itself.
ASIC's 2025-26 posture on the duty is engagement plus data-gathering rather than a public test prosecution: the regulator has been working with the large aggregators to review brokers' product recommendation patterns, loan flows, remuneration and consumer complaints, with an announced focus on internal dispute resolution and audit compliance practices across the rest of 2026. The signal for brokers: documentation that would stand up in a public action is the bar, even where no public action lands.
The duty sits inside the broader regulatory stack: an Australian Credit Licence (or credit-representative authorisation) is the authority to provide credit assistance; the [Best Interests Duty] is the conduct standard that applies once authorised; ASIC enforces the standard; and the Australian Financial Complaints Authority is the dispute pathway when a consumer believes the duty was breached.