A clawback is a provision in the lender-broker commission agreement that requires a broker to repay some or all of the upfront commission received on a loan if the borrower repays the loan within a specified period after settlement.
How clawbacks work. When a loan settles, the broker receives the upfront commission from the lender (via the aggregator). If the borrower refinances, sells the property, or repays the loan in full within the clawback period — typically 18 to 24 months — the lender requires the broker to return the commission. The aggregator deducts the clawback from the broker’s future commission payments.
Clawback periods. Most Australian lenders apply a 100% clawback in the first 12 months (the full upfront commission is repaid) and a 50% clawback in months 13–24 (half the upfront commission is repaid). Brokers who write loans that are frequently repaid in the clawback window face significant revenue volatility.
Managing clawback risk. Brokers manage clawback risk by ensuring the loan product genuinely suits the client’s long-term needs, avoiding loans that are likely to be refinanced immediately, maintaining strong client relationships to remain the broker of record when the client does eventually refinance, and holding sufficient cash reserves or credit facilities to cover clawback events.
Impact on broker income planning. Net income projections should account for estimated clawback rates — typically 1–3% of the trail book per annum in a stable interest rate environment, rising in periods of active refinancing.
