Earlier this month, I was part of a mortgages and brokers panel at the Responsible Lending and Borrowing Summit and one of the topics generating a lot of debate was the broker best interests duty which will come into effect on 1 July 2020.
While across the industry there are questions about how the new duty will impact brokers from an administrative and compliance standpoint, at Lendi we’re excited about the opportunities it presents for both improved customer outcomes and growth across the mortgage broking category.
Currently, 40 per cent of new mortgages are taken out directly with a lender however the best interests duty will create a significant difference between the service offered by banks and the service offered by brokers.
This regulation makes the recommendations provided by brokers across the entire industry more valuable than those recommendations provided directly by bank home loan staff because customers will be assured that they have been provided choice from a greater range of options and that these recommendations have not been influenced by the potential for gain for the broker. Borrowers will be assured that the recommendations are designed purely to meet their individual needs and goals.
As more customers understand the practical implications of the duty, we can only assume more new purchase borrowers will engage a broker rather than go direct to a lender and more existing borrowers will refinance via a broker rather than negotiate with their current lender if they want the best outcome.
We’ve always had a best interests duty built into the Lendi business model and we welcome the standardisation of this approach. It can only be a good thing for the industry and our collective customers.
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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.
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