ASIC's best interests duty review: the findings, and what they ask of you

Take one of your settled files where the broker put the client into a loan that was not the cheapest on the shortlist. There is usually a sound reason: an offset the client wanted, a faster approval, a lender they asked for by name. Now read the note that records that reason. Does it explain why that particular client was better off, or could it have been pasted onto any file that month?

That question is at the centre of the review ASIC published on 13 October 2026. REP 840 is ASIC's review of how the industry is meeting the best interests duty, more than five years after the duty began in January 2021. It covered 13 credit licensees across eight large aggregator groups, which between them account for about two-thirds of all broker representatives. ASIC examined 1,600 loan recommendations from the two years to 31 March 2025.

This is a plain-English read of what the review found and what it asks of you as the licensee. It is not legal or compliance advice.

What the best interests duty review found

Start with what it did not find, because the headlines will skip it. ASIC found that licensees generally had processes designed to support compliance. Commissions on standard home loans were broadly similar, and brokers did not appear to favour the lenders that pay them more.

What ASIC did find is narrower and more awkward. When a broker recommended a loan that was not the cheapest available, the reason recorded on the file often did not stand up. The bigger the extra cost to the client, the less often it stood up.

More than 80% of home loans are now written through brokers, and a household taking out a new mortgage spends around 45% of median household income on repayments. With that much at stake, the question is whether your files can show the recommendation was sound. ASIC found room to improve on that test.

The cost gap is where the evidence has to be

The sharpest part of the report is a trend rather than a single number. ASIC took the recommendations where the broker did not choose the cheapest loan, sorted them by how much more the chosen loan would cost the client over five years, and then judged how well each file explained the choice.

Where the extra cost was under $1,000, ASIC had no concerns with about three-quarters of the files. Where the extra cost went past $20,000, that fell to about a third. Its most serious concerns, a file note that was generic, inconsistent or missing, applied to roughly four in ten of those files. The pattern is the point: the quality of the recorded reasons got worse as the stakes for the client rose.

ASIC Commissioner Alan Kirkland put it plainly:

The greater the cost difference, the stronger the evidence needed to show the recommendation is in the consumer's best interests.

Read your own book against that. The gaps we see when we audit files cold look the same: a reason that reads as a category rather than a choice, such as "better product features" or "client preference", with nothing underneath it. None of that means the loan was wrong. It means the file cannot show the loan was right, and that is the file's job.

A file that was uploaded is not a file that was supervised

The second finding lands on you, the licensee, not the broker. ASIC looked at how licensees monitor their brokers and found that too much of it stops at process. Reviews checked that the file was complete and the boxes were filled, without asking whether the reason held up and the loan was appropriate. Three of the eight groups did not extend their file audits to every kind of credit assistance, so applications that were withdrawn, declined or did not proceed went unexamined.

The best interests duty binds the broker, and it binds you too. Licensees must take reasonable steps to ensure their brokers meet the best interests duty. That sits alongside your general conduct obligation as a licensee to supervise your representatives. ASIC's guidance on the duty itself is RG 273. The review changed none of that. What it showed is that the regulator will ask for evidence that your supervision works.

The report also looked at how licensees handle complaints and at the quality of the data they hold on recommendations and remuneration. Each deserves its own piece. One question runs through all of it: could you see a problem in your own network before the regulator did?

The question most licensees cannot answer yet

This is the test the review sets. Could you pull, today, every file from the last two years where one of your brokers recommended a loan that was not the cheapest on the shortlist? Could you sort those files by how much extra the client is paying, and show that the biggest cost gaps carry the strongest reasons?

If you cannot, you are not alone. ASIC found that none of the eight groups used a metric comparing the cost of the recommended loan with the other loans the broker considered, and two could not readily extract that cost data at all. That is not bad faith. It is a gap between doing the work and being able to prove it, file by file. The report shows where the regulator looks. Licensees can look there first.