Best Interests Duty (BID)
Definition
ASIC duty on mortgage brokers and credit assistance providers, since 1 January 2021, to act in the consumer's best interests under the NCCP Act 2009.
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 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.
Common questions
When did the Best Interests Duty start?
1 January 2021. ASIC originally scheduled commencement for 1 July 2020, then deferred by six months in response to COVID-19 disruption. 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 into Misconduct in the Banking, Superannuation and Financial Services Industry.
Who does the Best Interests Duty apply to?
Mortgage brokers and other Australian credit licensees and credit representatives providing credit assistance to consumers, as set out in Part 3-5A of the National Consumer Credit Protection Act 2009. It does not apply to credit providers directly (lenders writing their own loans), only to the intermediaries arranging credit on a consumer's behalf.
How is the duty actually assessed?
ASIC describes it as a principle-based standard rather than a checklist, what conduct satisfies the duty depends on the individual consumer's circumstances. ASIC's RG 273 sets out the factors it considers when assessing compliance, including the consumer's objectives and financial situation, the range of products considered, the basis of recommendation, and the broker's handling of any conflict between consumer and licensee interests.
