Clawback risk — the AU 12/24-month schedule explained

Clawback is the bit of broker economics that no one wants to think about until it happens. A client refinances out at month 14, the lender takes back half your upfront, and the cash flow you'd already mentally booked disappears. Multiply that across two or three loans in a quarter and you've got a five-figure hole in your year.

This piece walks through how AU clawback actually works in 2026, how to estimate your current exposure, and what a sensible broker does to manage it.

The standard AU clawback schedule

The default schedule used by the vast majority of Australian lenders is 12/24 months on upfront commission, declining. The trail commission isn't clawed back — only the upfront.

• 0–12 months post-settlement: 100% of upfront is clawable. If the loan discharges in this window, the lender takes back the full upfront they paid you.
• 12–24 months: 50% is clawable. Half goes back.
• 24+ months: zero clawback. The upfront is fully earned.

Most Big-4 lenders, most non-banks, and the major aggregator policies all align around this shape. There are variations — some lenders use a sliding scale (100% in year 1, then declining month by month in year 2), some non-banks have a 18/30 month structure, and a handful (mostly second-tier) have moved to 24 months at 100% for products with cashback. Always check the lender-specific schedule against the broker agreement that was current at the time of settlement.

What triggers a clawback

The trigger is the discharge of the loan — not the refinance application, not the rate-lock with the new lender. The clock runs to the date the loan is paid out at the original lender. Common discharge triggers:

• The client refinances away to another lender
• The client sells the property and doesn't roll the loan to a new purchase
• The loan is fully repaid (less common in the clawback window, but possible — windfall, inheritance, etc.)
• The loan is restructured into a new product at a different lender (sometimes the same lender if it counts as a new application)

Internal product switches at the same lender usually don't trigger a clawback. Same lender, different product code, same broker — generally fine. Always confirm with the lender's BDM before booking it as safe.

What clawback is not

A few things get confused with clawback. They aren't:

• Trail commission stopping. Trail can drop to zero for fixed-rate honeymoons, arrears, or post-settlement nil periods. None of that is clawback — it's nilled trail and recovers automatically once the cause passes.
• Lender reducing your upfront rate. That's a commission rate change, not a clawback. Affects future settlements, not historical ones.
• The aggregator deducting a fee. Aggregator splits are taken at the time of payment, not retrospectively.

Clawback is specifically: money the lender already paid you, taken back because the loan didn't last long enough.

Estimating your current exposure

This is the calculation most brokers don't do, and the one buyers will absolutely do when they look at your book.

For every loan settled in the last 24 months, compute:

exposure_per_loan = upfront_paid × clawback_percentage_at_today

Where clawback_percentage_at_today is 100% if the loan is under 12 months old, 50% if 12–24 months, and 0% beyond.

Sum across the book. That's your theoretical maximum exposure — the cash you'd repay if every loan in the clawback window discharged tomorrow. It won't happen, but it's the worst-case figure.

A more useful number is your expected exposure:

expected = Σ (exposure_per_loan × discharge_probability_per_loan)

Where discharge_probability_per_loan is your estimate of the chance that particular loan discharges in the next 12 months. For most loans in the clawback window, that's 5–15% — it's higher for clients with stress signals, very recent settlements with high LVR, or loans on lenders with chronic retention issues.

If you don't have a per-loan model, a defensible heuristic is 8% of the theoretical maximum. It tracks roughly with observed discharge rates in the first two years of an AU residential loan.

High-risk clawback loans

When you look at the loans in your 0–24 month window, these are the ones to watch:

• Recent settlements with a low introductory rate that's about to roll off. The client is about to feel the difference between the special rate and the lender's standard variable. They'll shop.
• Big-4 loans where the broker had to fight on rate at origination. If you discounted aggressively to win the deal, the client knows the market is competitive. They'll shop sooner.
• Cashback loans. Some non-banks paid a $3–4k cashback at settlement. Those clients are demonstrably cashback-motivated and will move again the moment another lender runs a campaign.
• High-LVR investor loans. Investors are more rate-sensitive than owner-occupiers. They shop earlier and more aggressively.
• Loans where the client's circumstances have changed. New job, divorce, second property purchase, business loan refinance. Any major financial event is a refinance event.

If you score your clawback-window loans on these dimensions, you can rank them by clawback risk and pre-emptively call the highest-risk ones to firm up the relationship.

Defensive moves

You can't eliminate clawback, but you can lower the expected hit:

• Quarterly check-in calls with every client inside the 24-month window. Cheap, easy, and reduces unprompted refinance behaviour materially.
• Rate review at month 9 and month 22. The first one is before any post-settlement rate creep gets uncomfortable. The second is right before the clawback window closes — if the loan's going to move anyway, get the internal refi done at month 25.
• Don't oversell low-rate honeymoons. Loans written on the headline rate alone discharge sooner. Loans written on rate-plus-service stick.
• Track your clawback rate as a KPI. If your book's running 6%+ annualised clawback over 12 months, something's structurally wrong — usually a lender or product mix that's not sticking.

Estimating clawback at the book level

A rough rule for AU residential trail books: 2–4% of trailing-12-month upfront comes back as clawback in a normal market. Above 5% is a red flag — either the loan mix is wrong, the client base is unusually rate-sensitive, or you're over-indexed on a lender with poor retention.

If you want a quick number on your own book, try the clawback calculator — it'll give you exposure today and an expected 12-month figure off a few inputs.

Why buyers care

For a broker book up for sale, clawback exposure is a discount line. A buyer who sees $40k of theoretical exposure with no offsetting analysis will discount the book — often more than the actual expected hit. A broker who hands the buyer a per-loan clawback breakdown with discharge probabilities can defend the price.

This shows up in the valuation methodology — recent settlements grade as C-loans by design, and the buyer is paying for the long-tail trail income, not the short-tail clawback exposure.

Key takeaways

• Standard AU schedule: 100% clawback in months 0–12, 50% in 12–24, zero after that. Some non-banks differ — check.
• Trigger is the discharge date, not the refinance application.
• Theoretical maximum exposure ≠ expected. Expected runs around 8% of theoretical for a normal book.
• Highest-risk loans are recent settlements with rate-sensitive clients, especially cashback-driven ones.
• 2–4% annualised clawback is normal; above 5% means a structural issue with the mix.
• Defence is cheap: quarterly check-ins, rate reviews at months 9 and 22, and not overselling honeymoon rates.