Clawback rates: what healthy looks like and how to track yours

A clawback deduction turns up on your monthly RCTI. Say it is $12,000 off a $150,000 commission run. You feel it straight away. What you cannot tell from that number is whether it is normal or a warning.

The dollar figure will not tell you, because raw clawback dollars grow as your book grows. A bigger business claws back bigger dollars. To know whether the leakage is proportionate you need the rate: commission clawback as a percentage of the upfront you earned. Your RCTI does not show it. That gap matters more now than it did a few years ago. Refinancing ran hot through 2025 and into 2026 as fixed rates rolled off and cashback offers normalised switching, which pushed more discharges into the two-year clawback window. And a clawback pattern is increasingly a supervision question, not only a revenue one.

This is a plain-English look at what your clawback rate is telling you, not legal or compliance advice.

Clawback dollars versus your clawback rate

Start with the number you are probably watching, and stop watching it. The clawback total on your RCTI moves with your settlement volume. Write more, and the clawback line grows on its own, whether or not anything is wrong. On its own it cannot separate healthy growth from a real problem.

Your clawback rate is the number that can. It is total clawback dollars divided by the upfront commission you earned over the same period, measured on a rolling 12 months so one large discharge does not distort the month it lands in. Clawback sits inside a two-year window set by the NCCP Regulations, and by law you cannot pass the cost to your client, so it stays inside your business to absorb and manage. Read as a rate, $12,000 in a strong month is a very different signal from the same figure in a quiet one.

What a healthy clawback rate looks like

Once you are measuring the rate, the obvious question is what a good one is. As a working gauge, a network under about 5% is in healthy territory, 5 to 10% is worth a closer look, and above 10% points to something that needs explaining. Treat those figures as an industry rule of thumb, not a hard standard. They are not set by any regulator and they are not drawn from published data, so they are a place to start asking questions, not a line you pass or fail.

The rate earns its keep when you stop reading it as a single number. A group rate is an average, and averages bury the outliers. A network sitting at a comfortable 4% can contain one writer running at 14%. The cut that matters is not the group rate on its own but the rate split two ways: by broker and by lender. Those two views turn a clawback figure into something you can act on.

When a clawback rate becomes a supervision question

Split the rate by broker and one thing surfaces fast: a writer whose rate sits well above everyone else's. That gap is worth a look, and not only for the revenue. There are two readings, one innocent and one not. The client-fit reading is that this broker's clients keep needing to move soon after settlement, which says the product was never the right fit. The harder reading is churn: a broker working the back book at the 13 to 18 month mark, rewriting loans for a marginal rate gain and a fresh upfront. That is the behaviour the best interests duty exists to catch.

Either way, this is your issue before it is anyone else's. The ACL holder has to take reasonable steps to ensure its brokers comply with the best interests duty (section 47(1)(e)), and a per-broker clawback rate is one of the clearest signals you already hold to do it. To be fair to your brokers, a high rate is a prompt to ask the question and record the answer, never a verdict on its own. Plenty of high rates have a clean explanation. But you cannot ask about a rate you cannot see.

The same breakdown can clear your brokers just as easily. Where a high rate concentrates in one lender across several different writers, look at the lender, not the writers. Usually it is uncompetitive retention pricing or thin post-settlement service pushing the client out. That is a panel decision, not a supervision one, and you can only make it if your data is cut by lender as well as by broker.

Why your clawback rate is invisible on the RCTI

None of this shows up in the document most principals rely on for it. The RCTI is a payment record. It reports a negative dollar figure for the month and nothing behind it: not the rate, not the trend, not the broker or lender or trigger that caused it.

The maths underneath is awkward too, because of net of offset. Your upfront is not paid on the full loan. It is paid on the amount drawn down minus whatever the client holds in a linked offset account, so the clawback is worked out on that lower net figure as well. There is a catch that costs real money. When a client later pulls those offset funds back out, to renovate, say, you become entitled to the upfront on that portion. Claiming it takes a deliberate manual step that most brokerages never take, so the money is simply left with the lender.

A spreadsheet cannot keep pace with any of this. It cannot track offset balances moving across dozens of loans, each on a different lender's sliding scale, then reconcile that against what was deferred and what was later claimed. It holds up for a handful of writers. Somewhere past 10 brokers it stops.

The question most principals cannot answer

So here is the test. What is your clawback rate this year? Not the dollar figure on the last RCTI. The rate, as a percentage of your upfront. And once you have it, which broker and which lender is driving it?

Answer that with real numbers and you already know whether you are looking at proportionate growth or leakage, and whether a soft spot is a client-fit problem, a churn problem or a lender problem. Without it, all of that stays invisible, including the writer who is quietly becoming a best interests duty risk. The number is in your RCTI every month. It is just not the one printed on it.