ASIC defers mortgage brokering industry reforms

ASIC has deferred the commencement of reforms to the mortgage brokering industry until 1 January.

UNSW Associate Professor Mark Humphery-Jenner said there was no good reason to delay the reforms.

The Australian Securities and Investment Commission has deferred the commencement of reforms to the mortgage brokering industry until 1 January next year.

The move comes after the federal government said it would delay implementing the recommendations of the banking royal commission by six months so the financial services industry can keep its full attention on minimising the fallout from the COVID-19 crisis.

ASIC has said it would continue to work towards finalising guidance on both reforms by mid-2020 noting that industry had requested guidance to be finalised as soon as possible.

“ASIC has deferred the commencement dates so industry participants can focus on immediate priorities and the needs of their customers at this difficult time,” ASIC said in a press release.

“In making this decision, ASIC also had regard to the important protections for consumers that these requirements introduce.”

ASIC will also defer the commencement for the design and distribution obligation until 5 October 2021 and

The design and distribution obligations were originally slated to come into effect on 5 April 2021.

The new rules that were to come into effect related to the obligation to act in a client’s best interest and changes around broker remuneration.

However, ASIC said it expected parties to continue preparing for the commencement of the timeline.

Mortgage & Finance Association of Australia CEO Mike Felton welcomed the decision from ASIC.

“Throughout the past two months the Government and Regulators have been pleased to receive ongoing feedback on the challenges our industry has been facing and we are delighted that they have taken a decision to prioritise the support brokers provide to their customers and to allow industry additional time to comply,” he said.

“Brokers have simultaneously had to also deal with a significant number of COVID related issues which have resulted in frequent and ongoing changes to processes and lender policies. This has placed pressure on resources which coupled with the non-availability of the final Regulations and Regulatory Guidance has complicated our industry’s ability to comply with a 1 July start date”

But UNSW Associate Professor Mark Humphery-Jenner said there was no good reason to delay the reforms.

“The coronavirus should not have disrupted the obligation to act in a client’s best interest,” he said.

“But in the grand scheme of things, six months won’t make much of a difference.”