AustraliaMy mortgage broker recommended an unsuitable loan product. Do I have any recourse?
Yes, you may have recourse under Australian financial services law if your mortgage broker failed to act in your best interests or provide suitable advice.
What the Law Says
Australian law requires mortgage brokers — as providers of financial product advice — to comply with strict statutory obligations under the Corporations Act 2001 (Cth). These include acting in the client’s best interests and ensuring any recommended loan is appropriate to their objectives, financial situation and needs.
Mortgage brokers are considered 'providers of personal advice' under the Corporations Act 2001 (Cth) when they recommend a specific home loan product based on your personal circumstances. This triggers legal duties under Part 7.7A.
The core obligation is the 'best interests duty' in section 961B, which requires the broker to act in your best interests and prioritise your needs over their own commission or business interests.
Section 961J gives you a statutory right to compensation if the broker breaches their duties — including recommending an unsuitable loan — and you suffer loss or damage as a result.
Brokers must also comply with ASIC Regulatory Guide 244 (RG 244), which sets out how to meet the best interests duty, including conducting a proper fact-find, assessing suitability, and documenting advice.
Statutory TextThe provider of personal advice to a retail client must act in the best interests of the client in relation to the advice.
— Corporations Act 2001 (Cth), s. 961B — Best interests duty
Statutory TextA person who contravenes section 961B... is liable to compensate the client for loss or damage suffered because of the contravention.
— Corporations Act 2001 (Cth), s. 961J — Compensation for breach of best interests duty
Statutory TextThe provider must have a reasonable basis for concluding that the advice is appropriate to the client.
— Corporations Act 2001 (Cth), s. 961G — Appropriate advice duty
What to Do
Gather all documents: loan application forms, emails, advice statements, and any disclosures about commissions.
Contact your broker in writing to outline your concerns and request a written response within 21 days.
Lodge a complaint with the Australian Financial Complaints Authority (AFCA) — free and binding up to $1 million.
If AFCA cannot resolve it, consider seeking legal advice about commencing proceedings in court — note the 6-year limitation period from the date of the advice.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.