Of all the flashpoints in the broking industry, few provoke as much debate as clawbacks.
The mechanism was thrust back into the spotlight earlier this year, when the Finance Brokers Association of Australia (FBAA) released details of its submission to Treasury’s consultation on unfair trading practices protections for small businesses and franchisees.
One of the association’s central arguments was the idea that brokers were being disadvantaged by clawbacks drifting away from their original purposes.
While introduced to deter broker misconduct and non-compliance, the FBAA said clawbacks are now increasingly triggered by circumstances outside a broker’s control, such as a property sale following a work relocation or divorce.
FBAA CEO Leo Gagic noted the sector is made up predominantly of small businesses and that “a broker’s livelihood and ability to function is inextricably linked to credit providers”.
“When managed appropriately, the lender–broker–consumer relationship is a mutually beneficial one, and this is the relationship we are seeking,” he said.
Tweaks to the model
This isn’t the first time the clawback questions have emerged over the past 12 months. Readers of The Adviser may remember the September 2024 petition from Paula Parola, Western Australia-based finance broker and director of Alorap Creations.
The petition, which gathered more than 2,000 signatures, called for the immediate cancellation of all pending clawbacks since the inception of the best interests duty (BID), refunding clawed-back commissions that had already been collected and for the creation of clear transitional guidance to ensure compliant behaviour without retroactive penalties.
However, the response from Treasurer Jim Chalmers, released earlier this year, seemed to pour cold water on the prospect of any meaningful change in the immediate term.
“Broker commissions are ultimately a commercial matter for negotiation between brokers and lenders and, subject to the existing regulatory framework, the government does not prescribe situations in which such arrangements should be entered into,” he said at the time.
“The clawback arrangements entered with each credit provider may vary and have adapted over time, driven by market competitive pressures and a desire by lenders to attract referrals from brokers.”
Chalmers also reiterated that clawbacks help ensure compliance with BID, warning that removing them could undermine deterrence and create regulatory uncertainty.
“Removing clawbacks could lead to adjustments in overall commission structures, potentially reducing the upfront or trailing commissions brokers receive or increasing costs for consumers,” he said.
“Similarly, retrospective refunds would require altering commercial agreements and introduce uncertainty for lenders and brokers.”
Tweaks begin
Lenders have begun to take action themselves, though. At the end of July, ING Australia announced changes to its policy for new loans settled from 1 August 2026.
The non-major confirmed it would waive clawbacks where a loan is discharged following the sale of secured property between 12 and 18 months after settlement. Speaking of the change, Sergio Delvescovo, ING’s national sales manager – broker, said the commission structure changes were an acknowledgment that property sales are “often outside a broker’s control”.
“Customers may need to sell a property for a range of reasons, including relocation, changes in family circumstances or other significant life events. In these situations, brokers have often done everything right, yet may still be subject to clawbacks,” Delvescovo said.
“We believe our change is a more balanced approach, that doesn’t punish brokers for decisions beyond their control.”
FBAA’s Gagic welcomed the move, saying it should be followed by all lenders, but noted that he hoped ING would consider expanding it to include the first 12 months.
“We understand that these can be complex issues, but I believe there is room for our industry to discuss these further with lenders,” Gagic said.
Brokers’ views
The recent developments have prompted strong reaction from brokers across The Adviser and sister brand Broker Daily, with many questioning whether clawbacks remain fit for purpose in 2026 (see page 4 for more).
Mansour Soltani, director of Soren Financial, said the current model is broken and well overdue for a rethink.
“We do the work upfront, meet our compliance obligations, and put the client into the right loan,” he said.
“Then, if that client sells 14 months later because they got a job transfer, went through a separation or their circumstances changed, we hand back commission we’ve already earned and often already paid tax on.”
Bernard Desmond, CEO of Blank Financial, said he had felt the impact of the clawback model firsthand, recalling a husband and wife who divorced just 11 months after settling their loan.
“Despite acting in the client’s best interests and doing everything correctly, I was required to repay 100 per cent of my commission through a lender clawback,” he said.
“To make matters worse, because the loan was on a fixed rate product, the clients were also charged substantial break costs by the lender.
Clawbacks should exist to deter misconduct or inappropriate lending – not to punish brokers and their clients when life takes an unexpected turn
– Bernard Desmond, CEO, Blank Financial
“In this situation, both the client and the broker were financially penalised for circumstances that neither of us caused or could have prevented.
“Clawbacks should exist to deter misconduct or inappropriate lending – not to punish brokers and their clients when life takes an unexpected turn.”
Meanwhile, Suzanne O’Connor, director of Dominion Finance, said that while her team worked to stay in contact with clients and assist with repricing where possible, clawbacks were sometimes unavoidable under the current system.
“It’s hard on all brokers, however particularly for young brokers who don’t have a trail book that can absorb these clawbacks,” she said.
“It’s like two steps forward and one back.”
