ASIC set to shadow shop brokers

As foreshadowed in our PD Days and Compliance Workshops last year, an article in The Australian this week confirmed that ASIC is set to shadow shop brokers across the country. Excerpt below:

"As part of our ongoing review of mortgage broking practices, we are undertaking consumer and broker research to better understand the home loan purchase process," ASIC senior executive Michael Saadat told The Australian.

He said the intention was to find out which factors, aside from commissions, led to people being sold different types of mortgages and whether there was any scope for improved behaviour.

ASIC wants to better understand whether broker advice results in good outcomes and whether borrowers are making an informed choice and being sold products that meet their needs. To achieve this, they have tasked hundreds of borrowers from a range of backgrounds and with a range of incomes to record their experiences at mortgage brokers over the coming months.

"While broker remuneration practices may have an impact on home loan choice, ASIC recognises that a range of other factors influence which home loan products are purchased, and that the purchase experience may vary across purchase channels -- such as through a broker, compared to directly from a lender," Mr Saadat said.

There is no need to be alarmed about the exercise as long as you are following the right processes. If you're unsure about any aspects of this, please contact the compliance team.