How can mortgage brokers ensure compliance with Australian lending laws and regulations?


Mortgage brokers assist borrowers in obtaining financing from various lenders and loan products, such as residential property loans, investment loans, and commercial loans.

However, with great power comes great responsibility, and brokers are subject to regulatory compliance requirements to ensure they act ethically and transparently.

Compliance with these requirements is mandatory and critical to building trust with consumers and maintaining a solid reputation in the industry.

This blog will explore the regulatory landscape for mortgage brokers in Australia and provide a comprehensive guide to compliance requirements.

We will also discuss the consequences of non-compliance and provide tips on how brokers can ensure they meet all their regulatory obligations while delivering exceptional service to their clients.

Key takeaways

  • Compliance is essential for mortgage brokers to maintain an ethical and high-quality service.
  • The consequences of non-compliance can be severe, leading to fines and long-term damage to the broker’s reputation.
  • MFAA and FBAA require members to adhere to a code of conduct and regulatory compliance obligations.
  • Collaborating with compliance experts can help brokers identify and mitigate potential risks, streamline processes, and avoid costly penalties.

Which regulatory compliance applies to mortgage brokers?

Here are some of the essential compliance requirements in Australia for mortgage brokers:

  • National Consumer Credit Protection Act (NCCP)

    This legislation sets out responsible lending obligations for brokers and lenders, including the requirement to assess a consumer's financial situation and suitability for a loan. Brokers must also hold an Australian Credit Licence (ACL) and comply with ongoing reporting and disclosure requirements.

  • ASIC Regulatory Guide 205

    This guide sets out best practice standards for mortgage brokers in conflicts of interest, commission structures, and record-keeping. Brokers must comply with these standards to ensure they act in the best interests of their clients.

  • Anti-Money Laundering and Counter-Terrorism Financing Act (AML/CTF)

    This legislation requires brokers to implement measures to prevent money laundering and terrorism financing, such as conducting customer due diligence and reporting suspicious transactions.

  • Privacy Act

    This legislation sets out requirements for collecting, using, and disclosing personal information, including the need for informed consent and the obligation to protect sensitive data.

  • Competition and Consumer Act (CCA)

    The CCA prohibits unfair business practices, including misleading, deceptive, and unconscionable conduct. Mortgage brokers must not engage in any activities that breach the CCA.

  • Corporations Act

    The Corporations Act regulates the conduct of companies in Australia, including mortgage broking companies. It requires them to act in the best interests of their clients, disclose conflicts of interest, and provide appropriate advice.

    These are just some of the essential mortgage broker compliance requirements that apply in Australia. Brokers must also comply with other laws and regulations, such as state and territory legislation, industry codes of conduct, and professional standards.

Can mortgage aggregator groups also help mortgage brokers meet compliance requirements? What kind of help do they provide?

Aggregator groups can be a valuable resource for mortgage brokers in meeting their compliance requirements. They provide support services, including:

  • Guidance and support

    The mortgage aggregator group provides clear and concise guidance on responsible lending obligations. They also offer support and advice on compliance-related issues, such as responding to regulatory inquiries or implementing changes to comply with new regulations.

  • Compliance tools and resources

    They offer compliance tools and resources to help brokers manage their responsible lending practices, such as checklists, documents required, software for record-keeping, and template documents for disclosures and client agreements. Also, provide access to a panel of lenders vetted for compliance and ethical standards.

  • Training and development

    Furthermore, they deliver regular training and development opportunities, including online courses and webinars on compliance-related topics, to help brokers stay up-to-date on regulatory changes and credit guide.

  • Compliance and Security Measures
  • Compliance audits

    The aggregators also conduct regular compliance audits to ensure brokers meet their general conduct obligations and provide final assessment and reasonable steps for improvement.

  • Licence assistance

    Additionally, they assist with obtaining and maintaining necessary Australian credit licence, such as an Australian Financial Services (AFS) licence.

  • Access to legal and compliance experts

    Mortgage aggregator groups often have in-house legal and compliance experts who can advise and guide regulatory compliance issues. This can be especially helpful for finance broker new to the industry or with limited compliance experience.

    By utilising these resources and support services, mortgage brokers can improve their compliance practices, reduce the risk of non-compliance, and focus on providing excellent service to their consumers.

    Brokers' BackOffice, a leading Sydney based outsourced loan processing service provider offers mortgage processing services to brokers in Australia. We provide compliance support, training and development, and access to software and tools for document management.

    We have two service models: pay per application and dedicated team member, which can help brokers manage costs and scale their business efficiently.

How do aggregator groups support mortgage brokers with compliance requirements?

Mortgage aggregator groups may conduct compliance audits and reviews to ensure that the affiliated mortgage brokers meet their regulatory compliance requirements. It can help verify where they may fall short and provide reasonable steps for improvement.

During a compliance audit or review, the aggregator group may assess the mortgage broker's compliance with various regulatory requirements, such as the National Consumer Credit Protection Act (NCCP), Privacy Act, Competition and Consumer Act (CCA), and Corporations Act.

The audit may involve a preliminary assessment of the broker's policies, procedures, and documentation to ensure they align with the National Credit Act. The aggregator group may also conduct interviews with the broker's staff and review consumer files to ensure that the broker is meeting their responsible lending obligations.

After the compliance audit or review, the aggregator group will provide a final assessment outlining the findings and reasonable steps for improvement. The broker may then work with the aggregator group to implement necessary changes to improve responsible lending obligations.

Please remember that compliance audits and credit reports are not meant to be punitive but to ensure that brokers meet regulatory compliance requirements and provide high-quality service to their consumers.

How do the mortgage aggregator groups raise audit queries?

Aggregator groups may raise audit queries in various ways, depending on their internal processes and the nature of the issue. Here are some common ways aggregator groups may raise audit queries:

  • Online compliance portals

    Many aggregator groups have online compliance portals where brokers can submit documentation and receive feedback. They may raise audit queries through the portal, highlighting areas where documentation is missing or where there are concerns about compliance.

  • Compliance managers

    Aggregator groups may have dedicated credit assistance providers responsible for monitoring brokers' compliance with regulatory requirements. These managers may raise audit queries through phone or email communications with the broker, asking for clarification on a particular credit contract or requesting additional documentation.

  • Compliance reports

    They may generate compliance reports highlighting areas of non-compliance or where there is a risk of non-compliance. These reports may be shared with brokers, and audit queries may be raised based on the findings.

  • On-site visits

    Occasionally, aggregator groups may visit brokers' offices to assess compliance. During these visits, the aggregator may verify areas of concern and raise audit queries.

  • Regular compliance reviews

    Mortgage aggregator groups may conduct periodic compliance reviews to ensure ongoing compliance. As part of these reviews, the aggregator may verify and raise audit queries based on any areas of non-compliance identified.

    The goal is to verify non-compliance or potential non-compliance and work with the broker to address these key elements and ensure ongoing compliance with regulatory requirements.

What happens if a broker does not meet regulatory compliance?

Suppose a mortgage broker does not meet their regulatory compliance requirements. In that case, they may face a range of consequences depending on the severity of the non-compliance and the specific regulatory requirement that has been breached.

Here are some potential consequences:

  • Regulatory fines and penalties

    Regulators such as the Australian Securities and Investments Commission (ASIC) may impose fines and penalties for non-compliance. These fines can be significant and may harm the reputation of the particular credit provider.

  • Legal action

    If the non-compliance is severe, the Australian financial complaints authority or borrowers may take legal action against the broker. This could result in court orders, damages, and legal costs.

  • Licence suspension or revocation

    Particular credit provider who repeatedly fails to meet responsible lending obligations may have their licence suspended or revoked. This could result in the loss of the credit provider ability to operate in the industry.

  • Loss of business and reputation

    Non-compliance can harm the credit providers reputation and lead to the loss of customers and business opportunities. The consumer may lose trust in the credit providers ability to provide quality service and meet their regulatory compliance requirements.

  • Criminal charges

    In severe cases of non-compliance, brokers may face criminal penalties. This could result in fines, imprisonment, and long-term damage to the reputation of the credit provider.

    Brokers need to understand their obligations and take steps to ensure ongoing compliance. This includes seeking support from mortgage aggregator groups, regularly reviewing and updating compliance practices, and seeking legal advice when necessary.

How do the MFAA and FBAA ensure their broker members comply with regulatory requirements and code of conduct?

Both the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) require their members to meet specific compliance requirements. These associations have codes of conduct that members must adhere to, which include responsible lending obligations.

The MFAA and FBAA require their members to meet compliance requirements, including adherence to a code of conduct that includes regulatory compliance obligations. Members must comply with the NCCP, AML/CTF, Privacy Act, and annual CPD training.

The associations also conduct regular audits and reviews of member practices and procedures and provide ongoing education and training on regulatory compliance.

How can collaboration with compliance experts ensure regulatory compliance?

Collaborating with compliance experts can bring several benefits for businesses to ensure compliance with regulatory requirements. Some of the benefits include:

  • Expertise and knowledge

    Compliance experts have in-depth knowledge and expertise in regulatory requirements and can provide guidance on how to meet those requirements.

  • Risk mitigation

    Collaboration with compliance experts can help credit providers verify and mitigate potential compliance risks before they become problems.

  • Cost savings

    Compliance experts can help businesses avoid costly penalties and fines associated with non-compliance.

  • Increased efficiency

    Working with compliance experts can help businesses streamline their compliance processes, making them more efficient and effective.

Mortgage compliance regulations


Without a doubt, compliance is crucial for mortgage brokers to operate ethically and provide high-quality service to their consumers. The consequences of non-compliance can be severe and damage a broker's reputation and business.

To meet compliance obligations, they must stay current with regulatory requirements and work with mortgage aggregator groups and associations like MFAA and FBAA.

At Brokers’ BackOffice, we understand the importance of compliance for mortgage brokers. That's why we offer various services to help brokers meet their compliance obligations, including our pay-per-application model and dedicated team member service. We collaborate with compliance experts to verify and address potential compliance risks, providing our consumers peace of mind.

By working with Brokers’ BackOffice, mortgage brokers can focus on their core business, confident that they meet their compliance requirements. Please get in touch with us today to learn how we can help you.