What Does Best Interest Duty (BID) Mean For Your Business?

What Does Best Interest Duty (BID) Mean For Your Business?

Despite the pandemic, mortgage brokers have been doing their best to help their clients get what they deserve. Given this, we know that most mortgage brokers think about how their clients would benefit from their situations. But what made everything official for brokers to always think about and prioritise the best interests of their clients in the new regulatory guide, the Best Interest Duty (BID).

Best Interests Duty is an official regulatory guide for Australian mortgage brokers that aims for two things:

1. Mortgage brokers to always act in the best interests of their customers; and

2. Mortgage brokers prioritise the customers' interests when providing credit assistance.

This became effective last 1st of January 2021, covering all your mortgage broking businesses.

But what does Best Interest Duty mean for your business?

BID aims to create a connection and alignment in the customer's best interests and expectation with your interests as mortgage brokers.

Although most mortgage brokers like you have been looking out for the best interests of your customers, it has officially become a legal duty to focus MORE on your customer's interests especially when providing credit assistance. This means that you need to ensure that you meet the standards of acting in the best interests of your customers within relevant situations.

Australian Securities and Investments Commission released a draft of guidelines around the common processes that you can do in your mortgage broking business.

1. Gather information about the customers. You as mortgage brokers should gather relevant information so you can provide adequate recommendations for your customer's best interests.

2. Assess what is in the customer's best interests. You as mortgage brokers should keep in mind holistic products to properly assess whether you are in the customer's best interests. Several factors are involved like cost-based (such as interest rates, fees and charges) and non-cost-based or loan features (such as offset, redraw and much more).

3. Present information and recommendations. You as mortgage brokers should give guidance by presenting product options and recommendations to accommodate your customer's expectations and best interests. It will be your duty to educate and inform your customers to make sound decisions with your assistance.

Mortgage brokers who will not abide by the BID obligations will face civil penalties such as 5,000 penalty units equating to $1,050,000.

With this new regulation, the presence of COVID-19 and the arduous tasks that mortgage brokers do and the limitations that brokers can do, the best way to manage all these is to acquire help from people who can take care of the repetitive tasks that drain all the energy and time.

Vision Outsourcing is the perfect solution to your mortgage broking needs. It is an outsourcing company that help mortgage brokers get the job done by doing less and delegating tasks to Virtual Assistants. Book a consultation with us today so you too can get the best in outsourcing help.

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