Mortgage broker employment contracts: who wears the clawback?

In a mortgage broker employment contract, three terms decide whether an experienced broker signs and stays: who wears the clawback, when their trail share starts, and whether the paper matches the verbal offer. Of 282 broker ads we tracked, two mentioned clawback and neither said who carries it, so brokers meet these terms in the contract.

The bottom line: Experienced brokers can like the base and the split and still turn down a seat over clawback, trail or a contract that does not match the offer. Brokers raise all three with FinTalent when they weigh an offer. Put those terms in writing early, in dollars, and make the contract say what was said in the room.

Why do experienced brokers stall on the contract and not the offer?

Three conversations show where experienced brokers get stuck. One broker weighing a role said we had sold them on the position and the day to day, then named their only concern as the remuneration structure and “zero percent ownership of the trail”, or at least zero income from it.

Another, weighing a seat with a three-year trail-sharing period, wanted to ask for it to be cut to two, “because I know what I can do”.

A third, looking at a salaried seat, asked us straight out: “what about clawback? If I’m an employee, I’m getting paid a salary.” They wanted a salary for the stability of “not having to then dig in my pockets”, and they named their two main issues as clawback and flexibility.

The ads do not prepare anyone for this. Of 991 broking and lending ads in our index over about six months to August 2026, 282 were broker roles. Two of those mentioned clawback, and both were the same recruitment pitch, posted twice, promising to protect brokers from it. Neither said who carries it. None of the 991 mentioned vesting.

A broker reading your ad learns the base and, with luck, the split. The terms they weigh hardest turn up for the first time in your contract.

Who wears the clawback when a loan leaves early?

Clawback starts with the lender. If a loan is refinanced or discharged inside the clawback window, the lender takes back some or all of the upfront commission. Many lenders have cut their windows to 18 months, and clawback can apply up to two years after settlement, according to The Adviser. Westpac cut its window from 24 months to 18 in 2023, taking back 100% in the first 12 months and nothing after 18.

The rules are moving. For loans settling from 1 August 2026, ING no longer claws back when the loan is discharged after a property sale between 12 and 18 months from settlement, MPA reported.

The MFAA put the first industry number on clawback in September 2026. The median gross clawback per broker rose 16.5% to $11,442 in 2025, according to its State of Mortgage and Finance Broking Report. That is a median of aggregator-level responses across five matched aggregators, not of individual brokers, so read it as scale rather than a pay slip. An FBAA poll run by CoreData found 84% of 100 brokers had been clawed back in 2024, and 65% of brokers working in a company lost more than $10,000 to it, The Adviser reported. Borrowers keep moving, with 664,000 customers switching $371 billion of home loans to a new lender over the past year, up 13% on the year before, on Elula’s analysis.

The clawback lands on the business first. After that your contract decides who wears it, and brokerages handle it one of three ways.

The third only works if the contract says so. A well-drafted commission clause is what gives a brokerage the ability to claw back commission from a broker at all, a law firm’s guide for brokerages explains.

Salaried seats need care. The Fair Work Ombudsman says an employer can only deduct from pay where the employee agrees in writing and it is mainly for the employee’s benefit, or where a law, award or registered agreement allows it. Recovering a clawback is hard to call mainly for the broker’s benefit. Some brokerages net it off the bonus instead, and that wording belongs with an employment lawyer.

Both sides have a fair fear here. The broker’s is paying back commission on a good loan because the client sold or refinanced for reasons nobody controlled. The principal’s is carrying the clawback on a broker’s loans after that broker has gone. Pick one model and write down who wears it, on which loans, and for how many months after the broker leaves. With lender windows running 18 to 24 months, that tail is what brokers ask about.

Who keeps the trail, and when does the broker’s share start?

Trail is the income a broker builds while they work for you. Brokers wrote a record 81.6% of new home loans in the June 2026 quarter, on MFAA figures, and the MFAA’s broking report found median gross trail revenue per broker rose 18.7% to $77,894 in 2025. ING, for one, pays 16.5 basis points of trail for the life of the loan, and has cut the rate on loans held past four years from 20 to 15 basis points. How upfront and trail stack up is in what broking roles really pay, and our trail book calculator puts a value on the book.

Whose trail it is comes down to the contract. The principals we talk to run four models, and each told us why in their own words.

One principal keeps the book outright. Brokers get access to it, “but if they leave, it’s mine and that might stop a lot of people from doing it.” They were comfortable with that: “I’ll get the people who want to do it.”

A group owner hiring a broker went the other way. They were willing to give a proven broker some of the trail after two years, and said “I’m happy to put it in the contract”.

The head of one broking arm pays a percentage of the ongoing trail back to the broker at the end of each year, on a book that keeps growing, because “that’s incentive for them to stay with us”.

An owner gives brokers a share of trail once their monthly settlements clear a set hurdle, because “you got to retain your big earners”.

Joe put our view to one principal on a call. A broker willing to walk away from their share of the trail is willing to walk away from anything else you could offer them. The broker’s fear is years of work sitting in someone else’s asset. The principal’s fear is paying for the leads and the training, then watching the broker leave with the client relationships. A trail share with a start date answers both.

“Whose book is it?” is the question we tell brokers to ask when they are thinking of switching brokerages. Any of the four models can work, provided the broker hears which one you run, with the dates, before they resign.

What happens when the contract does not match the offer?

Brokers walk. One broker we spoke to had been offered a base plus a split for every client, “and then the contract comes through looking different”. They called it one of the biggest red flags and turned the seat down. In the job they were leaving, they had been promised their broker accreditations, never got them, and ended up processing again. Others had left that office for similar reasons, they said.

A broker who has already lived through one broken promise reads a changed contract as the next one. Read your own template before the offer goes out, restraint clause included. Every number said in the room belongs in the contract, and every clause in the contract should be one you can explain.

What should a principal put in writing before the offer goes out?

• Clawback. Who wears it, on which loans, and for how many months after the broker leaves.
• Trail. The share, the date it starts, what it grows on, and what happens to it on exit.
• The split, in dollars. A percentage hides whole layers, and what your split is really buying walks through the arithmetic.
• Progression. If you promised accreditation or a broker seat by a date, the date goes in.
• The restraint. Read it before the broker does, against the draft law below.

Treasury released an exposure draft in September 2026 that would ban non-competes for employees earning below the Fair Work high income threshold of $190,100. Commission would not count toward that figure, so a broker on a modest base and big commission sits under the line, Baker McKenzie notes. Co-worker non-solicits would be banned for every employee, and a client non-solicit would survive only if it is reasonable and not drafted as a cascade, as Ashurst sets out. Our post on the ban has been updated to the draft’s $190,100 threshold. If the draft passes, trail and clawback terms will do more of the work a restraint used to do.

Ask what happens to a candidate’s book, and tell them what happens to the one they build with you, in the first conversation. Our senior broker hiring guide puts the book question second of its four phone-screen questions, and the same trail, clawback and restraint tangle is why experienced brokers are so hard to move in the first place.

Joe runs every search himself. If you are hiring a broker now, our mortgage broker recruitment page sets out how the search runs.