---
title: Best Interests Duty for Mortgage Brokers Explained | GNT Finance
description: What the mortgage broker best interests duty under the NCCP Act means for Melbourne borrowers, how it differs from a bank's obligations and what to expect.
url: https://gntfinance.com.au/legal/best-interests-duty-mortgage-brokers/
section: legal
updated: 2026-09-01
author: Gorakh Timilsina, GNT Finance
---

# The best interests duty for mortgage brokers

**In short:** Since 1 January 2021, mortgage brokers in Australia must act in the best interests of their client when recommending a home loan, under Part 3-5A of the National Consumer Credit Protection Act 2009 (Cth). Where there is a conflict between the broker's interests and yours, the broker must prioritise yours. Banks and their branch staff do not owe this duty. ASIC enforces it with civil penalties.

The best interests duty (BID) is the reason a broker's recommendation is legally different from a bank's product pitch. It came out of the Hayne Royal Commission, and it changed how every broker in the country must work. Here is what the duty requires, what it doesn't, and how to tell whether you are getting it.

## What the law says

Part 3-5A of the National Consumer Credit Protection Act 2009 (Cth) contains two core obligations:

- **The best interests duty (section 158LA).** A mortgage broker must act in the best interests of the consumer in relation to credit assistance for a credit contract secured by a mortgage over residential property.
- **The conflict priority rule (section 158LB).** If the broker knows or ought reasonably to know that there is a conflict between the consumer's interests and the interests of the broker, a related party or the aggregator, the broker must give priority to the consumer's interests.

The Act also bans conflicted remuneration for brokers, including volume-based bonuses and soft-dollar benefits from lenders that could influence recommendations. Standard upfront and trail commission remains permitted because it is paid on similar terms across lenders; see [how mortgage brokers get paid](/guides/how-mortgage-brokers-get-paid/).

ASIC's Regulatory Guide 273 explains how ASIC expects the duty to be met. Its key themes are that a broker must:

- gather enough information to understand the client's needs, objectives and financial situation;
- consider a reasonable range of products and lenders, not just a shortlist of favourites or the lenders with the fastest turnaround;
- weigh cost heavily, but also features, service and the client's circumstances;
- present options and explain why the recommended loan is in the client's best interests; and
- keep records that show how the recommendation was reached.

Breaches attract civil penalties enforced by ASIC. Individual borrowers cannot sue for a breach directly, but they can complain to the broker's internal dispute resolution process and then to the Australian Financial Complaints Authority, which can award compensation.

### Who owes the duty and who does not

| Party | Owes best interests duty? | Owes responsible lending obligations? |
|---|---|---|
| Mortgage broker | Yes | Yes (as credit assistance provider) |
| Bank or lender staff | No | Yes (as credit provider) |
| Comparison website | No | Usually not (no credit assistance) |
| Financial adviser recommending a loan | No, unless also acting as a broker | Depends on role |

The distinction matters. A bank must not lend you an unsuitable loan, but it has no obligation to tell you a competitor's product is cheaper. A broker does.

## How the duty works in practice, step by step

1. **Discovery.** Your broker asks about your income, expenses, debts, deposit, property, timeline, plans to move or renovate, and preferences such as offset accounts or fixed rates. This is more than a lender's application form.
2. **Research.** The broker filters their lender panel by policy (visa status, self-employed income, LVR, property type) and then by cost and features. Our [how it works](/how-it-works/) page sets out GNT Finance's process.
3. **Comparison.** You should see more than one option, with the total cost over a realistic period, not just the headline rate. The [comparison rate](/guides/comparison-rate-explained/) is a starting point, not the whole picture.
4. **Recommendation and reasons.** The broker explains why the recommended loan suits you better than the alternatives, including any trade-offs.
5. **Disclosure.** Before you proceed, you receive a credit guide, a credit proposal disclosure showing the commission the broker expects to receive, and a preliminary assessment on request.
6. **Records.** The broker documents the process so that the file shows the recommendation was in your interests.

## Worked example

Two clients each want to borrow $520,000 to buy a $650,000 house in Craigieburn.

The first is a PAYG couple with a 20% deposit and a preference for a low variable rate and an offset account. The broker's panel shows three lenders within a small margin of each other on rate. One has a higher annual fee but a full offset; one has no fee but only a redraw facility. Over five years, at an illustrative 6.00% p.a., the offset lender is cheaper for a couple who keep $30,000 in savings. That is the recommendation, and the reasons are documented.

The second is a self-employed tradesperson with one year of financials. The lowest-rate lender in the panel won't accept the income. The best interests duty doesn't require the broker to recommend a loan that will be declined; it requires the broker to find the most suitable loan among those realistically available, explain the higher cost, and note when refinancing to a sharper product becomes possible. See our [self-employed home loan guide](/guides/self-employed-home-loan-guide/).

In both cases, the broker's commission from each lender is similar, so no conflict arises. If one lender offered a bonus that could sway the recommendation, the conflict priority rule would require the broker to ignore it.

## What it means for your home loan

- **Rate is not the only test.** A loan that is slightly dearer but lets you keep a guarantor off the title, avoid LMI or refinance cheaply later may be in your best interests, and the broker must explain why.
- **Panel size matters, but so does policy knowledge.** A broker who understands which lenders accept visa income, casual income or a small apartment adds more value than a spreadsheet of rates.
- **Ask for the alternatives.** You are entitled to understand what else was considered.
- **The duty continues at refinance.** When you [refinance](/services/refinancing/), the broker must again consider whether moving is actually in your interests after fees and any break costs.
- **The duty does not make the broker your financial adviser.** Structuring for tax or investment strategy is separate advice.

GNT Finance was built around this duty. Gorakh Timilsina's years as a senior credit officer mean the recommendation is grounded in what each lender will actually approve, not what looks best in an advertisement. Our home-loan service is at no cost to you in most cases, because lenders pay commission, and that commission is disclosed to you in writing before you proceed.

## Common mistakes borrowers make

- **Choosing a broker by rate promise alone.** The duty is about your whole situation.
- **Withholding information.** A broker cannot act in your interests without knowing your plans and finances.
- **Not reading the credit proposal disclosure.** It shows exactly what the broker is paid and by whom.
- **Assuming a bank branch owes the same duty.** It doesn't.
- **Not complaining when something feels wrong.** Every broker must have a complaints process and belong to AFCA; see our [complaints page](/complaints/).

## Frequently asked questions

### Do mortgage brokers have to act in your best interest?

Yes. Since 1 January 2021, section 158LA of the National Consumer Credit Protection Act 2009 (Cth) requires mortgage brokers to act in the best interests of the consumer when providing credit assistance for a home loan, and section 158LB requires them to prioritise the consumer's interests over their own in any conflict. Banks and lender staff are not subject to this duty.

### What is the difference between best interests duty and responsible lending?

Responsible lending obligations apply to both lenders and brokers and require them not to arrange or provide a loan that is unsuitable for you. The best interests duty applies only to brokers and goes further: the loan must not merely be suitable, it must be the option that is best for you among those reasonably available, after considering cost, features and your circumstances.

### Can I sue my mortgage broker for breaching the best interests duty?

The duty is enforced by ASIC through civil penalties rather than by a direct right for consumers to sue. In practice, if you believe a broker's recommendation was not in your interests, you complain to the broker's internal dispute resolution process first and then to AFCA, which can order compensation for loss caused by the breach. Keep the credit proposal disclosure and any written recommendation.

### Does the best interests duty apply to refinancing?

Yes. Any credit assistance for a loan secured over residential property is covered, including a refinance. The broker must consider whether refinancing is actually in your interests after discharge fees, new establishment costs and any fixed-rate break costs, and must not recommend a switch that mainly benefits the broker through a new commission.

### How do I know my broker is following the best interests duty?

Look for a detailed fact-find, at least two or three loan options with the reasons for the recommendation explained in writing, a credit guide and a credit proposal disclosure showing commissions, and a clear answer when you ask what else was considered. A broker who cannot explain why the recommended loan beats the alternatives is not meeting the duty.

## Talk to GNT Finance

Ask us to show our working. GNT Finance compares lenders across policy, cost and features, explains the recommendation in plain language, and discloses every dollar of commission before you sign. [Book a free consultation](/contact/) or call 0426 403 703.

*This page is general information only and not legal, tax or financial advice. Laws change — confirm current rules with the State Revenue Office, the ATO or a licensed professional.*