What ASIC's Broker Review Means for Your Home Loan
ASIC's first major test of the best interests duty found brokers bypassed the cheapest loan in 1 in 5 cases — here's what that means for you.
The Australian Securities and Investments Commission has published Report 840, titled *Mortgage brokers: Review of best interests duty and complaints handling practices* — its first major assessment of the best interests duty (BID) since the obligation came into force in January 2021.
Australian Broker reports that the review examined 13 credit licensees across eight large aggregator groups, together representing roughly two-thirds of Australia's mortgage broker representatives. ASIC drew on data from April 2023 to March 2025.
The headline finding: seven of the eight aggregator groups reported that their brokers did not recommend the cheapest available loan in more than 20% of cases. In some of those instances, the loan files lacked sufficient evidence to explain why.
"Where a broker recommends a loan that costs more than the available alternatives, consumers should be able to clearly understand why that recommendation delivers greater value for their circumstances," ASIC Commissioner Alan Kirkland said.
Critically, ASIC did not find brokers were steering borrowers toward lenders that pay higher commissions. Finance Brokers Association of Australia (FBAA) chief executive Leo Gagic called this "a positive finding for our profession." MFAA CEO Anja Pannek added: "With broker market share now at a record 81.6 per cent, the contribution brokers make to competition and putting downward pressure on price is significant."
MFAA data shows brokers facilitated 838,815 residential home loans worth $495.55 billion in 2025. With that scale comes genuine regulatory scrutiny — and an obligation to document every recommendation that departs from the cheapest option.
When a Higher-Cost Loan Can Be the Right Call
The BID framework, set out in ASIC's Regulatory Guide 273, does not require brokers to recommend the cheapest loan in every situation. It requires them to recommend the loan that best serves the borrower's actual needs — and to document why, especially when price is not the deciding factor.
Industry professionals interviewed across the sector offered several clear scenarios where a pricier loan is the better choice:
**Borrowing capacity.** Some lenders use more generous serviceability calculators than others. For a buyer stretching to purchase in their preferred suburb, a lender prepared to extend a higher loan amount — even at a marginally higher rate — may be the only viable path. FBAA CEO Gagic noted: "Rate alone does not always equate to the best outcome for a client. Factors such as credit policy, borrowing requirements, flexibility and future needs can all influence the most appropriate recommendation."
**Employment type.** Self-employed borrowers, contractors, and those with variable income may find that only certain lenders will assess their income favourably. A low-doc loan — designed for borrowers who can't provide standard payslips — typically carries a higher rate, but may be the only option available. Gagic noted that in such cases, "it may not be the cheapest option, but it can enable them to secure a loan suited to their circumstances."
**Offset accounts.** A basic loan with a lower rate does not always outperform a slightly more expensive loan with a full-featured offset account. For borrowers who maintain a consistent buffer, the interest saved through an offset can exceed the cost of a marginally higher rate over the life of the loan. Lenders vary significantly in how their offset products are structured.
**Settlement speed.** Rate comparisons do not capture the cost of a delayed approval. When a buyer has a fixed settlement date, a lender that takes three extra weeks to process the application — even at a lower rate — can mean missing settlement entirely. Missing settlement can mean penalty interest, extra costs, and in the worst cases, losing the property and the deposit.
**Future flexibility.** A couple expecting reduced income during parental leave may benefit from a loan that permits a period of interest-only repayments. For first home buyers, eligibility for government schemes and a lender's assessment criteria around the First Home Guarantee can be as critical as the headline rate.
What ASIC Is Asking Borrowers and Brokers to Do
The ASIC review doesn't just matter for brokers — it's a useful framework for borrowers too. It sets a clear standard: if your broker recommends a loan that isn't the cheapest, you are entitled to know why. The loan file should explain your non-rate needs, how the recommended loan meets them, and why a cheaper option wouldn't achieve the same outcome. The larger the cost gap, the stronger that explanation needs to be.
As a borrower, you can help by being specific about your priorities upfront. Do you need a fast approval? An offset account? A lender on a particular government scheme list? Raising those needs clearly helps your broker document a recommendation that genuinely reflects your circumstances.
If you want to benchmark independently before your next meeting, comparing home loans by rate gives you a useful reference point. Walking in with that figure in mind makes it easier to evaluate whether a pricier recommendation is justified.
For first home buyers especially, the ASIC framework reinforces that a broker's job is not just to chase a lower rate — it's to find the loan that actually gets you to the settlement table.
MFAA chief executive Anja Pannek summarised it well: "Price absolutely matters. Consumers should have confidence that their broker has considered the available options and can clearly explain why a particular loan is in their best interests. At the same time, a cheaper loan is not necessarily the right loan for every borrower."
Ask for the reasoning. And if the explanation doesn't add up, ask again — that's exactly what the best interests duty was designed to support.
Read the full review at Australian Broker.