Mortgage broker clawback is a lender’s recovery of some or all of the upfront commission when a borrower repays or exits a loan early. The lender and aggregator agreements set the recovery scale and exemptions. A period of 18 to 24 months is common, but each loan’s agreement determines the actual window.
You can reduce avoidable early exits through suitable loan selection and client reviews. A reserve absorbs the clawbacks that still arrive after you have spent the commission.
How Commission Clawback Works
Clawback means taking back money already paid because a condition of the payment was not met. For mortgage brokers, the condition usually concerns how long the loan stays with the lender.
A commission clawback clause lets the lender recover upfront commission after an early payout, refinance or another trigger specified in the agreement. The recovery often reaches the broker through the aggregator’s commission statement.
Clawback commonly applies during the first 12 to 24 months after settlement. Many published schedules recover 100% of the upfront in the first 12 months and 50% after that until the window closes. YBR Aggregation’s published residential commission tables show that pattern with an 18-month Westpac window and a 24-month NAB window. Apply the schedule governing the loan, including its settlement date and exemptions.
A clawback fee charged to a borrower to replace your lost commission passes that loss to the consumer. That is prohibited for covered mortgage broking arrangements, even if a credit guide discloses the fee. A separate fee for your broking services needs its own disclosure and agreement. Disclosure does not make clawback recovery from the client lawful.
The clawback period is the time during which that recovery can apply. A sliding scale reduces the amount as the loan ages. The agreement also sets how partial repayments, internal switches and exemptions are treated.
For a hypothetical loan, assume you received $3,000 upfront and the applicable recovery tier is 50%. An early discharge produces a $1,500 clawback. Use the actual upfront payment and tier, including the statement’s tax treatment, when checking a notice. The upfront commission guide explains the payment being recovered.
The Impact on Broker Income
A clawback removes cash after you have already paid expenses and potentially tax on the original commission. Several early discharges during a refinance surge can turn a normal statement into a cash-flow problem.
For example, a hypothetical $3,000 recovery erases the profit from five settlements that each left $600 after business costs. That is why settlement volume alone gives an incomplete picture of income.
An unexplained discharge can also strain the client relationship. Ask why the borrower moved and whether a review was missed. Your commission loss must not become pressure on the client to stay.
Strategies That Genuinely Reduce Clawback
Reduce avoidable clawbacks by matching the loan to the client’s plans and checking the book before predictable refinance triggers.
- Know each agreement’s window, recovery tiers and waiver conditions. Record the schedule that applies to the particular loan.
- Monitor fixed-rate expiries and the end of interest-only periods. Arrange a review before repayments or rates change.
- Keep in contact after settlement. Ask about planned sales, large repayments and refinancing so you can assess the client’s next move.
- Match products to real plans. A borrower expecting to sell soon needs a loan suited to that exit, regardless of your commission.
Before settlement, explain what an early payout or refinance could cost the client in lender fees. Explain separately that the lender can recover your upfront commission and that you absorb that cost.
Record the settlement date, clawback window and recovery scale in your customer relationship management system (CRM). Give one person responsibility for checking the exposed loans each week.
A discharge-authority request is a warning that a loan may leave soon. Contact the client to understand the reason and offer useful assistance. Keeping the client within your panel does not itself prevent clawback on the original loan.
Comparing Clawback Terms Between Lenders
Lender agreements differ in the percentage recovered, the way it reduces and the circumstances that qualify for a waiver. Compare the schedule for the specific product before lodging.
| Term | Possible Treatment | Effect on Exposure |
|---|---|---|
| Full recovery | The full upfront remains recoverable during a specified window. | Exposure stays high until the tier or window changes. |
| Tapered recovery | The percentage reduces in steps or month by month. | The same upfront payment creates a smaller recovery as the loan ages. |
| Waivers | An agreement can waive recovery for defined hardship or death circumstances. | A waiver applies only when its conditions are met. |
| Non-bank models | Non-bank lenders can use different recovery structures. | A major bank’s schedule is an unsafe substitute for the actual agreement. |
For lender-specific clawback terms, use the guides for ANZ or Westpac. The guides also cover NAB, Bankwest and CBA. Compare the lender’s schedule with your aggregator agreement to establish your own exposure.
Which lenders have no clawback?
Victorian Mortgage Group and La Trobe Financial publish no-clawback terms for their home loans. Other lenders offer no clawback only on particular products or commission options.
| Lender | Published No-Clawback Terms | Scope |
|---|---|---|
| Victorian Mortgage Group | Brokers keep the upfront when a customer refinances or repays early. | Its whole product suite. |
| La Trobe Financial | Nil clawback, with 0.50% upfront and 0.25% trail. | Its published residential term sheet. |
| Bank Australia | No clawback in YBR Aggregation’s published schedule. | Loans governed by that schedule. |
| Resimac | No clawback for eligible Specialist loans. | Specialist only. Prime keeps a 24-month window. |
| Mortgage Ezy | An elected option of 0.75% upfront and 0.10% trail, instead of 0.60% and 0.15%. | Named products where you elect the option. |
| Connective Home Loans | No clawback on Connective Bridge and Elevate commercial lending. | Those products only. Eligible Elevate specialist home loans have a six-month window. |
While reasonable steps have been taken in preparing this summary, errors are possible. Lenders can change their clawback terms, so verify them with the lender and your aggregator before relying on them.
If a lender’s clawback terms are incorrect, contact us with the lender, the product and the correct terms.
Some lenders shorten the window instead. HomeStart states there is no clawback after the first year.
A no-clawback option can trade a higher upfront for a lower trail or a different borrower rate. Recommend the loan that suits the client first, then confirm the clawback terms for that product and your aggregator agreement.
Compliance Boundaries Around Clawback
You cannot pass a commission clawback to the consumer. Regulation 28VG of the National Consumer Credit Protection Regulations 2010 sets that boundary for covered remuneration arrangements.
That regulation also limits the repayment obligation to two years from the relevant credit-provision event and caps recovery at the benefit paid. The contractual schedule determines the recovery within those legal limits.
Suitability under the National Consumer Credit Protection Act 2009 (NCCP Act) and your best interests duty govern the recommendation. The Australian Securities and Investments Commission (ASIC) explains the duty in Regulatory Guide 273: Mortgage Brokers: Best Interests Duty.
Recommend the option that serves the client, including a beneficial refinance inside your clawback window. Chasing the client for the lost commission conflicts with those obligations even if your agreement says nothing about recovering it.
Planning and Client Relationships
Plan for clawback across the whole book, with a cash reserve and lender relationships that fit different client needs. Diversification reduces dependence on one lender’s commercial terms, while client suitability remains the basis for each placement.
Use the worst clawback month from the past year as your initial reserve benchmark. Hold that amount separately until your exposure and trading conditions justify releasing it.
For example, if your worst month totalled $6,000, start with a $6,000 reserve. Compare it with loans still exposed and increase it if a concentrated settlement run creates a larger possible recovery. A new brokerage without a full year’s history must size its buffer from the upfront at risk.
Keep reviews useful to clients even when a sale or hardship makes an exit unavoidable. A client who leaves a lender can still return to you for their next loan.
If you add financial advice income, you need an Australian financial services licence (AFSL) or authorisation under an appropriate licensee. A compliant referral arrangement can direct clients to an authorised adviser. ASIC’s financial advice obligations explain the authorisation requirement.
Where Technology is Heading
Portfolio monitoring shows which loans remain inside a clawback window and which clients need a review before a likely exit.
Track My Trail’s Clawback Risk lists every loan still inside its clawback period, with days remaining and the upfront at stake. It groups exposure as Critical, Watch, Monitor or Passive under the relevant aggregator or lender rules.
Compare two monthly trail reports as well. Track My Trail’s Quick Analysis shows lost trail, discharged or refinanced clients and large repayments. A large repayment on a loan inside its window is a reason to investigate possible early discharge. Lost trail needs checking against the loan’s status and the aggregator statement.
Use the monthly trail-checking workflow to connect those changes with your settlement records and prioritise client conversations.
Economic Trends That Drive Clawbacks
The rate cycle changes borrowers’ reasons to refinance, while financial pressure can lead to hardship-driven sales or payouts. Either can bring an exit forward into the clawback window.
When fixed-rate loans expire or competing rates improve, review the exposed loans together. If several clients plan to refinance at once, compare the possible recoveries with your cash reserve before that month’s commission arrives.
For hardship-driven exits, review the agreement’s waiver conditions and gather the supporting evidence. Do not assume a waiver applies to every forced sale.
Export Your Clawback Exposure
Export every settlement from the past 12 months and turn it into a loan-by-loan exposure list. Include older settlements that still sit inside a longer window so the total covers the whole book.
- Mark each loan still inside its agreement’s clawback window. Record the upfront paid, window end and applicable recovery tier.
- Calculate each loan’s possible recovery over the coming year. Count each loan once at its highest applicable recovery, then total the exposed commission.
- Compare the exposure with your worst-month reserve benchmark. Set a cash target that covers the risk your brokerage can absorb, and record who will review it.
- Book reviews with clients whose loans leave their window within six months. Bring forward reviews where an expiry, discharge request or repayment change needs attention sooner.
Finish by reconciling the loan count and upfront amounts with your settlement and commission records. Every exposed loan must have a recovery tier and an owner for its next review.
