The mortgage broker best interest duty is a legal obligation introduced in Australia in 2021 under the National Consumer Credit Protection Act (NCCP Act). It requires mortgage brokers to act in the best interests of the consumer when providing credit assistance.
Core obligation. When recommending a credit product, a broker must prioritise the interests of the consumer over their own interests or those of any third party. This includes lenders, aggregators, or referral partners who might benefit from a particular product being recommended.
Practical requirements. The best interest duty requires brokers to:
– Consider a sufficient range of loan products to identify one that is not unsuitable for the client
– Compare options across the lender panel rather than defaulting to a single preferred lender
– Document the reasoning behind their recommendation
– Ensure the recommended product is appropriate to the client’s current and reasonably foreseeable circumstances
Conflict priority rule. Where a conflict exists between the broker’s interests and the client’s, the broker must prioritise the client’s interests. This means brokers cannot recommend a product simply because it pays higher commission.
Impact on referral fee structures. The best interest duty does not prohibit referral fees from buyer’s agents or financial planners. It applies specifically to the credit product recommendation made by the broker — not to the broker’s referral partnerships on the property side.
