A sliding scale commission pays a changing percentage as agreed thresholds are crossed, while fixed commission keeps one percentage. Choose fixed for a simpler calculation when its net payout meets your needs. Consider a sliding scale only when its written rules produce a better result after deductions and the arrangement meets the applicable remuneration rules.
A growing brokerage does not automatically benefit from tiers. The commission base and whether a higher rate applies to one band or the whole period can change the answer.
Distinguish a Fixed Rate From a Sliding Scale
A fixed rate pays the same percentage of the agreed commission base. A sliding scale changes that percentage when a defined measure reaches a threshold.
For example, a fixed 80% share of $10,000 commission pays $8,000. The same rate on $15,000 pays $12,000. The rate stays fixed while the dollar payment changes.
A flat-dollar fee is a different arrangement. A $500 charge remains $500 under its agreed conditions, regardless of the commission base. Compare that separate question in commission sharing versus flat aggregator fees.
A tier can be measured against commission income, eligible settled loan volume or another defined measure. The threshold measure and the amount receiving the percentage can be different. A volume target measured in loan dollars does not mean the broker receives that percentage of the loan.
Fixed rates reduce band calculations, but they do not guarantee steady income. Sliding scales can increase the recipient’s share, but a higher advertised top rate can still produce a lower total payment.
Calculate the Payout Under Both Structures
Calculate each structure on the same commission base, using the agreement’s exact tier method. A marginal tier changes the rate only for the amount within that band. A whole-period tier applies the reached rate to the entire eligible base.
The following hypothetical arithmetic uses $30,000 of eligible upfront commission received in one quarter, excluding GST. There are no fees or clawbacks in this example. These figures illustrate calculation methods, not an available or approved mortgage-broker remuneration agreement.
| Structure | Hypothetical rule | Recipient’s payout |
|---|---|---|
| Fixed percentage | 80% of the entire $30,000 | $24,000 |
| Marginal sliding scale | 75% on the first $20,000 and 85% on the remaining $10,000 | $15,000 + $8,500 = $23,500 |
| Whole-period sliding scale | 75% up to $20,000, then 85% of the entire base once it exceeds $20,000 | $25,500 |
The marginal scale pays $500 less than fixed, despite its 85% top rate. The whole-period scale pays $1,500 more than fixed on the same income.
The whole-period threshold also creates a jump. At exactly $20,000 the hypothetical payout is $15,000. At $20,001 it is $17,001 when rounded to whole dollars. The agreement must specify whether reaching the threshold or exceeding it activates the new rate.
When tiers depend on settled loan volume, calculate eligible volume first and identify the corresponding rate. Then apply that rate to the commission base specified in the contract. Keep the volume calculation separate from the income calculation.
Check the Rules That Change the Result
The measurement period and eligible transactions decide which rate applies. Two scales with identical percentages can pay different amounts when one resets monthly and the other quarterly.
- Record when each period begins and ends, whether totals reset and how a part-period is treated.
- Define eligible volume. Confirm treatment of staged construction drawdowns, refinances, top-ups and loans shared by two brokers.
- Separate upfront from trail. State whether trail has its own fixed share, enters a tier calculation or is excluded from it.
- Specify deductions. Record how fees and clawbacks affect the commission base, and whether a clawback also changes a previously reached tier.
- Set the timing rule. A loan settled before period-end but paid in the next period needs an explicit allocation rule.
- Use a consistent GST basis. Compare percentages on the same tax basis and show GST separately from the underlying entitlement.
An aggregator’s payment to a brokerage and the brokerage’s payment to an employee or contractor are separate calculations. Record each agreement’s recipient and base. An aggregator deduction does not establish the staff member’s entitlement unless the internal agreement uses that net amount.
Mortgage-broker remuneration is also subject to legal restrictions. The National Consumer Credit Protection Regulations 2010, regulations 28VB and 28VE address permitted monetary benefits and volume-based benefits. Have the licensee assess a proposed tier arrangement before adopting it. Calling a payment an internal split does not establish that it is permitted.
Reconcile the Statement Before Applying the Tier
Match the settled loans to the commission statement before calculating anyone’s tier entitlement. A missing receipt or duplicate loan can change both the base and the reached band.
- List eligible loans with their loan references, responsible broker and settlement amounts. Assign each to the period required by the agreement.
- Match each upfront receipt to its loan and reconcile statement totals to the amount received. Keep unpaid commission separate from paid commission.
- Reconcile trail separately, then identify clawbacks and other adjustments. Record the original loan for each adjustment.
- Calculate the eligible threshold measure and apply the correct tier method. Show the base, rate and deductions on the recipient’s statement.
- Resolve exceptions before finalising the payment. Keep a correction record when a later receipt or clawback changes a previous period.
For example, if a $2,000 upfront receipt is missing from the hypothetical $30,000 base, a receipt-based agreement starts with $28,000. Its fixed 80% payout is $22,400. Adding an expected receipt too early would overstate that entitlement by $1,600.
Review transactions close to thresholds for unusual timing or allocation. A whole-period jump can encourage delaying or accelerating a settlement to reach a band. A fixed percentage still rewards additional commission and does not remove advice conflicts.
The Australian Securities and Investments Commission (ASIC) explains in RG 273, Mortgage brokers: Best interests duty that brokers must prioritise consumers where interests conflict. A higher payout cannot justify a recommendation or settlement decision that puts remuneration ahead of the consumer.
Model both structures against reconciled periods that include a quiet quarter and a delayed receipt. Choose using the resulting net payments and the work needed to administer the agreement. Keep client recommendations separate from commission targets.
