The provisions that apply
Two sections in Part 3-5A of the NCCP Act do the work. Section 158LA requires a mortgage broker to act in the best interests of the consumer when providing credit assistance in relation to a credit contract. Section 158LB is the conflict priority rule: if the broker knows, or reasonably ought to know, of a conflict between the consumer's interests and their own or a related party's, they must give priority to the consumer's interests. Sections 158LE and 158LF apply the same duties to credit representatives.
Refinancing is squarely inside the duty. RG 273 notes that assisting a consumer to refinance an existing loan is credit assistance (s 8 of the Act). The responsible lending obligations for credit assistance (ss 115 to 117, and ASIC's RG 209) still apply, so the "not unsuitable" test runs alongside BID.
RG 273 is ASIC's June 2020 guide to the duty. We cover it in full in RG 273 and the best interests duty, explained for brokers. This article is only about the refinance note.
What RG 273 says about refinancing
| RG 273 | What it says | What it means for the note |
|---|---|---|
| 273.58 | Refinancing expenses may exceed the cost savings of a new loan, and then a new loan may not be in the client's best interests. The client may benefit from an explanation of when savings would exceed the costs. | Itemise switching costs and write down the break-even point. |
| 273.73(g) | One factor in assessing best interests is, for switching, the extent to which switching to the new contract is in the client's best interests. | The note must compare against the current loan, not only against other new loans. |
| 273.76(a) | A fixed rate loan with a substantial break fee could be detrimental to a client who wants flexibility to refinance. | Record fixed-rate break costs and whether the client may want to move again. |
| 273.62-65 | Quantifiable promotional offers (cashback, waived fees, discounted rates) count as part of cost. Watch eligibility, exclusions and time limits. Weigh short-term offers against a lower rate or features. | Show the cashback in the cost maths and say whether it drove the choice. |
| 273.118 | BID does not require periodic reviews. But if you review, or a past client contacts you, BID applies to any credit assistance then. | A health check is a BID event. Note it like any other advice. |
| 273.119 | You must not suggest a client stay in their loan without considering whether that is in their best interests. It quotes the Explanatory Memorandum example of a broker avoiding a refi to dodge a clawback. | Staying put is a recommendation too. Record why. |
| 273.120 | For clients thinking about refinancing, you should consider the costs associated with refinancing. | Costs are not optional background. They belong in the reasoning. |
| 273.159-160 | Recommending based on commission a higher-rate loan, a loan missing features the client needs, or one lender for most clients will not satisfy the conflict priority rule. Keep reasoning records where a recommendation benefits a related party. | Record the conflict and why the client's interest still won. |
Two RG 273 examples are worth reading in full. In Example 10, a home loan health check, the broker surveys the market, concludes the client's goal of repaying quickly is best met by the current loan, and documents it. ASIC says BID applies. In Example 11, the client asks the broker to get their existing lender to sharpen the rate, and the broker passes on the discount without any other suggestion. ASIC says no credit assistance was given, so BID did not apply. Once a broker suggests the client stay, move, or increase their limit, it does.
Counting the real cost of switching
Weak refi notes quote a monthly saving and stop. A reviewer wants the other side of the ledger, using the actual figures for this file.
- Discharge fee charged by the outgoing lender.
- Break costs on any fixed portion. These can be large and move with rates. Get a written quote from the lender, dated.
- Government fees to discharge the old mortgage and register the new one with the state land titles office.
- New lender fees: application, valuation, settlement, and any annual package fee over the period you are comparing.
- LMI. Mortgage insurance does not move with the loan. If the new LVR is above the new lender's threshold, the client may pay LMI again.
- Lost features or discounts, such as an existing offset balance arrangement, a package discount, or a rate lock.
- Offsets to cost: cashback, waived fees or a discounted intro rate. Count them, but note any eligibility rules and when the discount ends (RG 273.63).
Then do the break-even: net switching cost divided by the net monthly saving (after any new ongoing fees) gives an approximate number of months. If the client might sell or move again before then, the refi may not be in their interests on cost alone.
Watch the term. Moving 25 years remaining onto a fresh 30-year term lowers the repayment but usually increases total interest. If the term is extended, record that the client understood the trade-off and tie it to an objective they gave you (RG 273.73(c)).
When staying put is the right answer
A refinance generates new commission and staying usually generates none. That imbalance is why a well-documented "stay" recommendation is some of the best BID evidence a broker can have.
Staying, or taking a retention offer, is likely to be the better answer when:
- the break-even runs past the client's likely horizon for the loan or the property;
- the client is part-way through a fixed term with meaningful break costs, and the saving does not clear them;
- a new LVR would trigger LMI that the current loan does not carry;
- the current lender will reprice close to the market and the client values not changing accounts;
- the client's circumstances have changed (reduced income, self-employed without recent financials, a new debt) so servicing with a new lender is tight or the application may not be approved;
- the feature the client cares about most, such as an offset they actually use, is already on the current loan.
Record the stay-put option like any other: what it costs, what it does for the client's objectives, and why it was or was not recommended.
Clawbacks, commission and related parties
Refinances create conflicts in both directions, and s 158LB applies to both.
- Pull to switch. A new loan earns new upfront commission. The note needs a reason to switch that stands up without it.
- Pull to stay. If you arranged the current loan recently, moving it may trigger a clawback of your commission under your lender or aggregator agreement. This is the exact scenario RG 273.119 quotes from the Explanatory Memorandum. Check whether a clawback applies and write it down, whatever you recommend.
- Pull to a particular lender. Different upfront or trail rates, volume arrangements, or a white label or related-party product. RG 273.159 lists recommending on the basis of commission a higher-rate loan, or one without features the client needs, as failing the conflict priority rule.
- Related parties. In RG 273 Example 17, a refinance to a related party's product lowered the client's rate, but ASIC says the broker must still be able to explain how the client's interests came first, and should have explained the relationship.
Disclosure does not fix a conflict. RG 273.158 says you cannot comply with the conflict priority rule merely by disclosing a conflict or getting the client's consent, and s 334 voids any term that tries to waive it. The note should record the conflict and the reasoning that put the client first. If nothing was identified, a one-line "no conflict identified, clawback checked" is still worth writing.
Comparing the options on paper
RG 273.92 and 273.93 say a shortlist with one recommended option is generally helpful, and the client should understand why each option was chosen. For a refi, the current loan belongs on the shortlist. The figures below are fictional and assumed, for a $600k OO P&I loan with 25 years remaining. Repayments are standard P&I over 300 months.
| Current (Lender A) | Retention offer (Lender A) | Option B (Lender B) | |
|---|---|---|---|
| Rate | 6.49% var | 6.14% var | 5.99% var |
| Monthly repayment (25 yrs) | $4,047 | $3,917 | $3,862 |
| Switching costs | Nil | Nil | Approx $650 (discharge + govt fees, assumed) |
| Annual fees | Nil | Nil | $395 package fee (assumed) |
| Cashback | N/A | N/A | $2,000 (assumed), conditions apply |
| Offset | No | No | Yes, 100% |
| Break-even vs retention | N/A | N/A | Saves approx $55/mth on rate, approx $22/mth after package fee, so approx 29 months to recover $650. The cashback covers switching costs if its conditions are met. |
| Fits client priority | No | Partly (rate only) | Yes (rate + offset) |
Against the current rate, Option B looks like an easy win. Against the retention offer, the package fee eats most of the rate saving, so the recommendation rests on the offset and the client's savings habits. That is the reasoning the note has to capture.
Checklist: refinance file note
- Date, time, length, who was present, and consent if the call was transcribed.
- Client's reason for refinancing and their ranked priorities, in their words.
- Current loan details: lender, balance, rate, P&I or IO, fixed or variable, fixed expiry, remaining term, features in use.
- Updated circumstances: income, expenses, other debts, OO or investment, property value estimate and LVR.
- Whether the current lender was approached, and the retention offer if any.
- Shortlist with the current loan included, and one recommended option.
- Each switching cost itemised, with break cost quotes on file.
- Net saving and break-even in months. Any cashback counted and its conditions noted.
- Term: kept or extended, and the client's understanding if extended.
- Why the recommended option is in the client's best interests relative to the others (RG 273.90).
- Conflicts: new commission, clawback on the existing loan, related party. How the client came first.
- What you explained (break costs, LMI, IO expiry, offset use) and that the client understood (RG 273.165(f)).
- Client's decision, including if they chose against your recommendation (RG 273.104).
- Written on the day of the call (RG 273.169).
Our NCCP file note compliance checklist covers the responsible lending side as well. For the full BID record beyond refis, see what a BID file note needs to show, and for the NCCP structure see how to write a compliant NCCP file note.
Worked example refi note
Fictional clients and assumed figures, matching the table above.
- Why they called
The clients asked for a review of the loan on their own home after their lender sent a rate rise letter.
- Their current loan
- Lender A, $600,000, variable rate of 6.49%, principal and interest (P&I), 25 years left. No offset account.
- We arranged this loan three years ago. We checked, and no commission clawback applies if they leave.
- Estimated property value $920,000, so they owe about 65% of the value (a loan-to-value ratio, or LVR, of about 65%). No lenders mortgage insurance (LMI) either way.
- What the clients want, in their words
- First: "get the rate down".
- Second: "somewhere to park our savings". They have about $45,000 in a high-interest savings account and add about $1,500 a month.
- Third: keep the loan on 25 years. "Don't want to drag it out."
- Their situation
Both are salaried employees (PAYG). Incomes unchanged and no new debts. They can afford a Lender B loan at the lender's assessment rate.
- Options
- Stay with Lender A: we asked Lender A to reprice. Its retention offer is 6.14% variable. No offset account is available on their current loan.
- Lender B: 5.99% variable with a 100% offset account. $395 a year package fee. $2,000 cashback if they settle within 90 days and borrow at least $250,000.
- Lender C: 6.04% basic variable, no offset. Set aside because it does not meet their second priority.
- Costs and savings
- Cost to switch to Lender B: about $650 for the discharge fee and government fees.
- Against the retention offer: the rate saves about $55 a month, or about $22 a month after the package fee. On the rate alone, it takes about 29 months to recover the switching costs.
- Cashback: the $2,000 cashback covers the switching costs if its conditions are met.
- Offset: $45,000 in the offset saves about $2,700 a year in interest at 5.99%. That is well above the package fee, and it grows as their savings build.
- Loan term: kept at 25 years, as the clients asked.
- Our recommendation
- Switch to Lender B.
- Why this is in their best interests: it meets all three priorities, has the lowest rate on the shortlist, and they can use the offset from day one.
- Why not stay: staying is reasonable on rate, but there is no offset, so it does not meet their second priority.
- Conflicts
We earn new upfront and ongoing (trail) commission if they move to Lender B, and this is disclosed in the credit proposal disclosure document (CPD). No clawback on the existing loan. Lender B is not a related party.
- Risks explained
- The offset only saves money if they keep a balance in it.
- The package fee is ongoing.
- The cashback has conditions.
- A variable rate can go up or down.
- Clients' decision
The clients understood and chose to switch to Lender B.
- Next steps
- Us: send the CPD and the application to Lender B by 20 September.
- Clients: send two payslips and their savings account statement by 19 September.
The stay option is on the page with its real number, the rejected lender has a reason, switching costs and break-even are there, the conflicts line covers both directions, and the recommendation is tied to the clients' stated priorities.
Getting it written while the call is fresh
RG 273.169 says contemporaneous notes may capture your reasoning better than notes drafted at the end. For a refi, most of that reasoning happens on the call.
If your calls run through Aircall or Dialpad, or you have a Teams or Zoom transcript, CallNote turns the transcript into a structured note in your own template in about two minutes. Use the NCCP template, or paste one of your past notes and it builds a template that matches your headings and shorthand. Publishing seals the reviewed note with a checksum, and later changes are append-only amendments. We never record calls or store audio, and data is hosted in Sydney. There is no native Mercury or Salestrekker integration, so the note goes in by PDF or copy and paste. More at CallNote for mortgage brokers.
On transcription consent: NSW, WA, SA, Tasmania and the ACT generally require every party's consent to record a private conversation, while Victoria, Queensland and the NT allow a party to the call to record it. The federal Telecommunications (Interception and Access) Act 1979 applies separately. Tell the client and note that they agreed.
On retention, RG 273.168 says how long to keep records may depend on the loan term, any IO period and whether the client refinances, and that keeping records for a short period puts you at risk. See how long to keep file notes in Australia.
Common questions
Does the best interests duty apply to a refinance?
Yes. Assisting a consumer to refinance an existing loan is credit assistance, so s 158LA of the NCCP Act applies, along with the conflict priority rule in s 158LB. ASIC's RG 273 specifically says the costs of refinancing may exceed the savings of a new loan, and that in that case recommending a new loan may not be in the consumer's best interests (RG 273.58).
What should a refinance file note include?
The client's reason and ranked priorities, current loan details, the options compared including staying with the current lender, each switching cost, the net saving and break-even point, why the recommended option is in the client's best interests relative to the others, any conflict such as a clawback, what was explained, and what the client decided.
Is recommending that a client stay with their current lender covered by BID?
Yes. RG 273.119 says you must not suggest a consumer remain in a credit contract without considering whether that is in their best interests. ASIC's Example 10 in RG 273, a home loan health check where the broker recommends the current loan, is treated as credit assistance covered by the duty. Record the stay option and your reasoning like any other recommendation.
Does BID apply if I just ask the client's lender for a better rate?
Possibly not. In RG 273 Example 11, a broker contacts the existing lender at the client's request, arranges a discount and passes it on without any other suggestion. ASIC says no credit assistance was given, so BID did not apply. Once you suggest the client stay, move, or increase their limit, the duty applies to that suggestion.
How does a commission clawback affect the best interests duty?
It is a conflict under s 158LB. If moving a loan you arranged recently would trigger a clawback, that interest could push you toward recommending the client stay. RG 273.119 quotes the Explanatory Memorandum's example of a broker who avoids a cheaper refinance because of a clawback as a possible breach. Record whether a clawback applies and why your recommendation still puts the client first.
Should cashback offers be counted when comparing refinance options?
Yes, where they can be quantified. RG 273.63 says quantifiable promotional offers such as cashback, waived fees and discounted rates should be considered as part of the cost of the product, with attention to eligibility, exclusions and time limits. RG 273.65 adds that you should weigh the short-term offer against a lower rate or features like an offset.