The Royal Commission-based legislation changing mortgage broker commission arrangements and imposing a client best interest duty have passed the Parliament.
The Treasurer, Josh Frydenberg, said that the changes were contained in the Financial Sector Reform (Hayne Royal Commission Response – Protecting Consumers (2019 Measures) Bill 2019.
The legislation covers the Royal Commission recommendation that mortgage brokers be required to act in the best interests of consumers when providing consumer credit assistance.
As well, it also covers off the Royal Commissions recommended reforms to mortgage broker remuneration by requiring the value of upfront commissions to be linked to the amount drawn down by the borrowers instead of the loan amount, alongside the banning of campaign and volume-based commissions and payments and capping soft dollar benefits.
The changes bring the regulatory environment for mortgage brokers more broadly into line with those of financial advisers.