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ASIC Ramps up Surveillance in the Mortgage Broking Space

ASIC Ramps Up Surveillance in the Mortgage Broking Space

With the raft of changes to the obligations of mortgage brokers as a result of Commissioner Hayne’s recommendations, it is no surprise to see increased surveillance and enforcement action from ASIC in the mortgage broking space. In ASIC’s 2019-2023 Corporate Plan, ASIC announced surveillance targeting mortgage broker accountability. We take a look at some of the common breaches and misconduct behind ASIC’s enforcement action in 2020.  Make sure you don’t make the same mistakes and face cancellation of your Australian Credit Licence (ACL) or other penalties.

Making False Statements

ASIC’s recent surveillance includes investigations into a number of mortgage brokers who have provided false information or made false statements to ASIC in their Annual Compliance Certificate.

On an annual basis, ACL holders are required to complete a Compliance Certificate which certifies they are complying with their obligations. It also includes certain declarations about your ‘fit and proper people’. This means declaring to ASIC that none of your fit and proper people have:

  • been terminated by their aggregator;
  • had their lender accreditation terminated; or
  • been reprimanded, disqualified or removed by a professional or regulatory body.

For companies or other body corporates, the ‘fit and proper people’ are:

  • directors;
  • secretaries; and
  • any senior managers who perform duties in relation to credit.

It is important to be clear about who your fit and proper people are in order to make accurate certifications about them in your Annual Compliance Certificate. As declarations about your fit and proper people are only required to be made once a year, you will need to keep records of all lender accreditations for your fit and proper people, including any terminations from aggregators or action taken by professional or regulatory bodies and ensure these are appropriately recorded in your Annual Compliance Certificate.

The penalties which have been issued in relation to recent ASIC enforcement in this area include fines and good behaviour bonds, however a number of matters are still before the courts.

The failure to lodge an Annual Compliance Certificate is itself a breach of your ACL obligations so all ACL holders should diarise their annual compliance date and the due date for lodging their Annual Compliance Certificate.

Falsifying Loan Applications

As part of its focus on mortgage brokers, ASIC has been active in their enforcement in relation to the arrangement of loans by brokers. Recent action against brokers includes those who have been involved in:

  • the provision of false documents in support of home loan applications; and
  • falsifying information in loan application documents.

ASIC’s action has seen banning orders and the cancellation of credit licences as a result of this type of misconduct. It is clear from ASIC’s recent enforcement action that it will continue to focus on mortgage brokers, particularly as new obligations in relation to best interests and conflicted remuneration come into force.

What Next?

The recent enforcement action from ASIC is not simply targeting the big banks and their associated broking teams. Many of the recent cases involve smaller mortgage brokers. Regardless of your size, it’s crucial to know your obligations under the law and ACL conditions and put in place rigorous compliance processes in order to meet them. Comprehensive record keeping, appropriate checks and balances, understanding your responsible lending obligations as a broker and attention to all key lodgement dates are fundamental in establishing a culture of compliance within your mortgage broking business.

Sophie Grace can assist with all aspects of compliance with your ACL obligations. Contact us today.


The Financial Sector Reform (Hayne Royal Commission Response – Protecting Consumers (2019 Measures) Act 2020 (Act) was passed by Parliament in February 2020 and introduces:

  • a best interests duty for mortgage brokers; and
  • a ban on conflicted remuneration for mortgage brokers and mortgage intermediaries.

The new obligations come into force on 1 January 2021.

Further Reading

For further information on ASIC’s enforcement action, please refer to ASIC’s Media Releases:

Sophie Grace is equipped to assist you in complying with your ongoing licence obligations, please contact us directly for further information.

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