Broker documentation best practice: files that show the best interests duty was met.

Since 1 January 2021 mortgage brokers have been required to act in the best interests of the consumer when providing credit assistance, and to prioritise the consumer’s interests where there is a conflict (sections 158LA, 158LB, 158LE and 158LF of the National Consumer Credit Protection Act 2009). ASIC’s Regulatory Guide 273 explains how it administers the duty, and it is explicit that the records are the evidence. This page sets out what good documentation looks like and how an Ermos unit helps produce it.

What ASIC expects the file to show

{steps([ ("What you learned about the consumer","Their objectives, financial situation and requirements, gathered and recorded. RG 273 says brokers are likely to need to gather information about the consumer and use it to assess what credit assistance is in their best interests."), ("What you considered","The options and products reviewed, including why some were set aside. A file that records only the recommended product cannot show that the best interests duty was applied to the alternatives."), ("Why the recommendation was in their best interests","ASIC’s guide says any product recommended must be in the consumer’s best interests and the reasons for that conclusion should be recorded and explained to the consumer. The reasons are the heart of the file."), ("How any conflict was handled","Where it was in the broker’s or a related party’s interest to recommend particular credit assistance, the file should show the consumer’s interests were prioritised, as the conflict priority rule requires."), ("That the responsible lending obligations were also met","The best interests duty and responsible lending are distinct obligations that both apply (RG 273.23). Information gathered for one helps with the other, and the file should show both."), ])}

Where files go wrong

• Reasons that restate the product. “Recommended ABC Bank at 5.9% variable” is a fact rather than a reason. The file needs why that product, for this consumer, over the alternatives.
• Notes written after the event. Contemporaneous notes carry weight; reconstructions written when a complaint arrives do not.
• Inconsistent structure. When every broker documents differently, the licensee cannot take the reasonable steps RG 273.173 requires of it, and reviews become archaeology.
• Client information in the wrong tool. Brokers who paste a client’s situation into a cloud AI tool to draft the best interests note have put payslips, statements and identity details on a third party’s servers to produce a record about protecting the client. Our what leaks to AI series shows what that disclosure contains.

How it works on the unit

{steps([ ("The file is indexed on the unit","Fact find, supporting documents, lender policy notes and the brokerage’s own templates are indexed on the unit in your office. Nothing leaves."), ("The note is drafted from the file","Ask for a best interests note in the brokerage’s structure. The draft sets out the consumer’s position, the options considered and the reasons, each citing the document it came from."), ("The broker reviews and owns it","The broker checks every statement against the cited source, adds judgement the file cannot supply, and signs it. The duty is the broker’s; the unit removes the blank page."), ("The structure stays consistent","Every note follows the same template, which is what makes licensee review possible and what makes a file defensible years later."), ])}

What it changes in the brokerage

Best interests notes stop being the task that waits until Friday. Juniors produce files in the senior broker’s structure from their first week. The licensee’s reviews find complete files instead of gaps. And every note is drafted from documents that never left the brokerage, which is the state a file about protecting a consumer ought to be in. Our page on best interests notes covers the drafting in detail.

Why on-premise matters here

A broker file is identity documents, payslips, bank statements and a consumer’s financial life. Producing the record that proves the broker acted in the consumer’s interests should not require sending any of it to a third party. On an Ermos unit it does not.

Common questions