Clawback turns an early discharge into a bill. Here is how the sliding scale usually works, which loans are most exposed, and the review cadence that prevents most avoidable clawbacks.
Clawback is the lender's right to reclaim upfront commission when a loan discharges soon after settlement. Every broker knows the definition. Fewer track their exposure to it as a measurable number, which is why clawback usually arrives as a surprise deduction rather than a managed risk.
How the sliding scale usually works
Most lenders apply a two-year window, with a higher repayment for a discharge in the first twelve months and a reduced proportion in the second. Some lenders use eighteen months, a few use a flat percentage across the window, and the exact terms sit in your aggregator's commission schedule rather than in any industry-wide rule.
- Discharge in year one: commonly the largest proportion of upfront repaid
- Discharge in year two: commonly a reduced proportion, tapering toward zero
- Beyond the window: upfront is retained, though trail still stops when the loan closes
- Trail commission itself is not clawed back — only the upfront
Which loans are most exposed
Clawback risk concentrates in predictable places: bridging and short-term arrangements, construction loans that refinance on completion, borrowers who settled on a sharp introductory rate, clients who bought with an explicit plan to sell within two years, and any loan where the borrower's circumstances were already in flux at application. A book weighted toward those profiles carries structurally higher clawback exposure than the headline settlement figure suggests.
The avoidable cases
Not every clawback can be prevented — a client who sells a property for personal reasons is nobody's failure. But a meaningful share of early discharges are competitor refinances that a conversation would have stopped. The borrower saw a better advertised rate, nobody had spoken to them since settlement, and switching felt like the only way to act on it.
Deloitte's 2025 report found proactive rate reviews delivered repricing outcomes averaging around 0.35% better for clients. A repriced loan stays on the book. A refinanced one triggers clawback and ends the trail.
A practical clawback-reduction routine
- Flag every settlement with its clawback expiry date, not just its settlement date
- Schedule a deliberate check-in inside the first six months, while the relationship is still warm
- Compare each in-window client's rate against current market pricing and reprice before they shop
- Identify short-horizon borrowers at application and set expectations about the review cadence
- Record every review — the same note satisfies Best Interests Duty and evidences the relationship
Measure it as a rate
Track clawback as a percentage of upfront commission earned each year. Once it is a number on a dashboard rather than an occasional deduction, it becomes possible to see whether contact cadence, lender mix or client selection is driving it — and whether changes are working.
Kayotte flags in-window loans and repricing opportunities across a book automatically, so early discharge risk surfaces while there is still time to act. Clawback terms vary by lender; confirm yours against your aggregator's commission schedule.
Source: Deloitte Access Economics, The Value of Mortgage and Finance Broking 2025, prepared for the MFAA.