Clawbacks in the Media
Over the last couple of weeks there have been some media reports about broker clawbacks and how these work, so let’s clear the air.
When a broker assists you with a loan, the broker gets paid an upfront commission by the lender. If you repay that loan before it has run for between 18 months and 2 years all, or part, of that commission is taken back by the lender – in the industry we call this ‘clawback’.
Regional Finance Solutions has never requested a client meet a clawback. Up until the Banking Royal Commission brokers, provided they had an agreement in place with their client, could request that the client reimburse them for the clawback. Post the Royal Commission however there is a clear line in the sand – a broker cannot ask a client to compensate them for a clawback, that’s the law.
So, if you choose to use a broker to assist you with your lending needs you can be confident that:
- If your circumstances change and you need to repay the loan early you will not be asked to compensate your broker for any clawback, and
- All home loan brokers are covered by the Best Interest Duty legislation; this means that a broker is legally obliged to act in your (the client) best interest.
Feel free to call or email us if you wish to discuss this or any other finance requirement.