A mortgage broker referral fee is a payment a broker makes to a person or business for introducing a client. The broker usually pays it from their own commission after settlement. Before accepting introductions, agree on the permitted activities, payment terms and client disclosure with your licensee.
What is a Mortgage Broker Referral Fee?
A referral fee pays for the introduction that brings a client to your brokerage. Referrers also call it referral commission. Common referrers include real estate agents, accountants, financial planners, builders and past clients.
The agreement can set a flat amount per settled loan, a percentage of upfront commission or a share of trail. Each arrangement changes what the brokerage retains and how long payments continue. A trail share needs a clear end point, including what happens if you sell the book.
Mortgage referrals involve credit licensing and client disclosure obligations. An affiliate link or marketplace introduction can use the same fee label, but its commercial terms do not establish compliance for a mortgage referral.
For the relationship itself, see our guide to building a mortgage broker referral network. Sharing work on a loan with another broker needs the separate terms in a co-broker agreement.
How Referral Fees and Referral Commission Are Paid
The brokerage funds the referral fee from the upfront or trail it receives, according to the agreed calculation. Set the payment trigger after settlement and receipt of the relevant commission. A settled loan and commission arriving in your account are separate events.
For example, consider a hypothetical agreement for 20% of upfront retained by the brokerage, excluding GST. If retained upfront is $2,000, the referral fee is $400 before any applicable GST. Defining the base prevents an argument about whether the split applies before or after the aggregator’s deduction.
The brokerage can pay the invoice itself. If your aggregator has a referrer payment facility, its approved process can distribute the amount through the commission run. Confirm who pays and reconcile the remittance so the same fee is paid once.
Clawback Terms
A lender clawback reduces commission already received. Your agreement must separately say whether the referrer repays any of their fee, how the repayment is calculated and when it falls due. The lender’s charge does not, by itself, create a matching debt from the referrer.
In the hypothetical example, an agreed proportional repayment would return $200 of the $400 referral fee after a 50% upfront clawback. Retain the lender or aggregator adjustment as evidence. Specify how the parties handle a disputed adjustment and whether future fees can be offset against an agreed debt.
ABNs, Invoices and GST
Collect each business referrer’s legal name, Australian business number (ABN) and GST status. Match the invoice to the agreement and the settled loan. Referral services are generally taxable when supplied by a GST-registered business, even though the underlying loan is a financial supply. The Australian Taxation Office (ATO) distinguishes taxable brokerage and facilitator services in GSTR 2002/2.
A referrer who is not registered for GST must not add GST. Keep an ordinary invoice or payment record instead. The ATO explains GST registration and charging GST.
An individual past client needs separate treatment. A one-off introduction does not automatically make them a business. Without an ABN, consider whether a valid Statement by a supplier applies. Otherwise, no-ABN withholding can apply. Keep the reason for the treatment with the payment, following the ATO’s explanation for external referral payments.
Disclosing Referral Fees to Clients
Disclose the referral arrangement before it becomes a surprise to the borrower. The National Consumer Credit Protection Act 2009 (NCCP Act) and its Regulations distinguish the credit guide from the client-specific proposal.
The credit guide states whether third-party referral payments are likely and identifies the classes of recipients. It also tells clients they can request a reasonable estimate and the calculation method. Regulations 26A(2) and 27A(2) cover licensees and credit representatives respectively.
The proposal identifies who pays and who receives the referral payment. Regulation 28G(6) requires the known amount or a reasonable estimate. Include the fee basis and assumptions so the client can understand the figure. A general statement that a referral fee might be paid is insufficient for the usual client-specific proposal.
The credit guide generally comes before credit activities. The proposal is given when credit assistance is provided. The Australian Securities and Investments Commission (ASIC) explains these documents in its responsible lending disclosure overview. Use your licensee’s approved disclosure documents and keep evidence of delivery.
A referral fee must also leave the broker free to act in the client’s best interests. A selling agent’s wish for a quick unconditional approval cannot decide which loan you recommend. ASIC’s RG 273 Mortgage brokers: Best interests duty explains why client consent does not resolve the conflict priority obligation.
The conflicted remuneration rules separately assess benefits that could influence regulated credit assistance or intermediary conduct. Their application depends on the recipient and the payment structure, including statutory exceptions. Paying a referrer is not automatically prohibited, nor does disclosure make every benefit acceptable. Have the licensee approve the actual arrangement under Part 3-5A of the NCCP Act and the Regulations. Our best interests duty guide covers the wider obligations.
When a Referrer Needs Authorisation
A referrer can introduce clients without becoming a credit representative when their conduct stays within an applicable exemption. The exemption depends on what the person does, not their job title or whether you call the payment a marketing fee.
There are two distinct models in regulation 25 of the National Consumer Credit Protection Regulations 2010.
Under regulation 25(2), the referrer only tells the consumer that a licensee or representative provides credit activities and how to contact them. The referrer discloses any referral benefit at the same time and in the same form as the contact information. The consumer then contacts the broker.
Regulation 25(5) covers passing the consumer’s details to the broker under an agreement. Its conditions include all of the following.
- A written agreement, or an accepted written offer, specifies the permitted conduct.
- The introduction contains only the client’s name, contact details and a short description of the credit purpose, if known.
- The details reach the broker within five business days after the referrer tells the consumer about the broker.
- The referrer discloses benefits and obtains the consumer’s consent to pass their name on.
- The referrer does not require the consumer to pay anyone for passing on their name.
- Referrals are incidental to another business whose main activity is not finding people to pass their details on.
- The referrer is not banned from the credit activity and does not run a business contacting people face-to-face from non-standard business premises.
That incidental-business condition matters for individual past clients and businesses selling leads. Do not assume every paid introduction fits regulation 25(5). Select the correct model with the licensee before collecting client details.
For a regulation 25(5) referral, regulation 9AB requires the licensee to maintain or access a referrer register. Contact must occur within ten business days of receiving the referral. The opening contact identifies the referrer and explains the potential benefit. In-person contact also confirms consent and asks whether the consumer wishes to continue.
An introduction that simply supplies the broker’s contact details can fit the first model. A referrer recommending a particular lender’s loan or helping complete that loan application goes beyond a simple introduction. That conduct needs appropriate licensing or authorisation unless another exemption applies. ASIC’s credit licensing referral guidance explains this boundary.
Licensee and Aggregator Referrer Policies
Obtain your licensee’s referrer policy before signing the agreement or promising payment. It determines the approval process you must follow within that licence. An aggregator can also impose conditions through your membership agreement.
Prepare a record for each referrer with their identity, approved agreement and allowed activities. Keep client consent and benefit disclosure for each introduction. Record the referral date, first contact and the resulting application or settlement. Reconcile every payment and clawback to the agreement.
Use the licensee’s registration process and approved agreement where required. Ask whether the aggregator requires its own registration or payment instructions. Follow the stricter applicable policy, including any restriction on particular referrers or fee structures.
What a Referral Agreement Must Include
Define the introduction that earns a payment and the activities the referrer can perform. Record the parties’ legal identities and the applicable licence. Specify the fee base, payment trigger and GST treatment. Include clawback, client disclosure, privacy consent and record-keeping obligations. Set the termination process and the treatment of existing referrals and continuing trail.
A real estate referral fee agreement needs particular attention where the agent acts for the vendor in the same sale. The agent’s sale incentive and the buyer’s borrowing interests can conflict. Identify that relationship and require the agent to meet their own state or territory disclosure duties. The brokerage must retain control of its credit recommendations and client information.
For example, a vendor’s agent must not receive the buyer’s borrowing limit through a referral update without the client’s appropriate authority. Limit updates to the information the client has agreed can be shared. Our guide to working with real estate agents as referral partners covers that relationship in more detail.
Referral Agreement Template for Australian Brokers
Use these clauses to prepare a regulation 25(5) business-referrer agreement for your licensee to approve. Complete every field in braces and attach the approved fee schedule. Each clause below requires licensee approval before use. Use a different approved agreement if the referral model differs.
1. Parties and Authority
Licensee approval required. This agreement is between {Brokerage legal name}, ABN {Brokerage ABN}, and {Referrer legal name}, ABN {Referrer ABN}. The brokerage acts under Australian credit licence {Licence number}, held by {Licensee legal name}. The agreement starts on {Start date}.
The parties appoint {Brokerage contact} and {Referrer contact} to manage referrals.
2. Permitted Introductions
Licensee approval required. The referrer may tell a consumer that the brokerage provides credit services and pass on the consumer’s name and contact details with consent. The referrer may add a short description of the credit purpose, if known. Details must reach the brokerage within five business days of telling the consumer about its services.
The referrer must meet every applicable condition of regulation 25(5). Referrals remain incidental to the referrer’s other business. The referrer must not recommend particular loan products or assist with a loan application. Any change in activities requires written approval before it starts.
3. Client Consent and Benefit Disclosure
Licensee approval required. Before passing details, the referrer must explain the referral benefit and obtain the consumer’s consent. The referral record must show what was disclosed and when consent was obtained. The brokerage gives the client its approved credit guide and proposal disclosures and follows the required first-contact process.
4. Fee Calculation and Payment
Licensee approval required. The agreed fee is {Flat amount or percentage and commission base}, with GST treated as {GST treatment}. The fee becomes payable when {Payment trigger after settlement and commission receipt}.
Payment is due within {Number} business days of that trigger and receipt of a valid invoice or approved payment record. The payer is {Paying entity} and the payment channel is {Brokerage or approved aggregator facility}.
For a trail share, the entitlement continues for {Period or ending event} and applies only to trail actually received on {Eligible loans}. The fee schedule states whether aggregator deductions occur before calculating the share.
5. Clawback and Adjustments
Licensee approval required. If the brokerage repays commission, the referrer’s repayment is calculated as {Agreed calculation}. The brokerage supplies evidence of the adjustment.
Repayment falls due within {Number} business days of the written notice. Any offset against future fees requires {Agreed authority}. A disputed amount follows {Dispute process}.
6. Privacy and Client Updates
Licensee approval required. The parties transfer referral details through {Approved secure method} and use them only for the consented referral purpose. The brokerage shares progress updates only within the client’s consent. The referrer must notify {Privacy contact} promptly of unauthorised access or disclosure. Each party follows the privacy duties that apply to it.
7. Records and Oversight
Licensee approval required. The referrer supplies consent and disclosure records with each introduction. The brokerage records receipt, first contact and payments, including adjustments. Records remain available to the licensee for {Approved retention period}. The referrer permits the compliance checks described in {Licensee policy} and reports any banning or authorisation change immediately.
8. Termination and Signing
Licensee approval required. Either party may terminate on {Notice period} written notice. The brokerage may suspend new introductions immediately for suspected unlawful conduct or loss of approval. After termination, fees for existing referrals and ongoing trail follow {Surviving entitlement terms}. Clawback, privacy and record obligations continue as specified in this agreement.
Signed for the brokerage by {Name and capacity}, signature {Signature}, date {Signing date}. Signed for the referrer by {Name and capacity}, signature {Signature}, date {Signing date}. Licensee approval reference {Approval reference}.
Track What Each Referrer Earns You
Compare each referrer’s fees with the settlements and commission their introductions produce. Record referral volume, settled loans, upfront received, referral payments and clawbacks over the same period. Add trail from the referred clients so an older relationship is not judged only on this month’s settlements.
Calculate retained commission as upfront plus trail received, less referral fees and clawback adjustments. Keep GST consistent across both sides of that calculation. Compare settlement conversion as settled referrals divided by total referrals, allowing time for recent introductions to reach settlement.
Track My Trail’s Quick Analysis lists the top referrers in your trail book from two monthly reports. You can see which referral relationships carry the most trail and compare that income with the fees in your payment records. Use the results when renewing the agreement, so its fee reflects the income the relationship produces.
