Mortgage Broker Referral Agreements in Australia

Referral fees can be a steady growth channel for mortgage brokers, but they can also create trust and compliance problems if the arrangement is vague. Common mistakes include paying for poor quality leads, failing to tell clients that a fee is being paid, or letting a referrer say more about loan suitability than they are licensed or authorised to say.

A well drafted mortgage broker referral agreement should make the commercial deal clear while protecting the client relationship. It should explain who can be referred, when a fee is earned, what disclosures are required, how personal information is collected and what the referrer must not say about loans, lenders or approvals.

For mortgage brokers, accountants, buyers agents, real estate businesses and finance-adjacent service providers, the goal is simple: set up referral fees that are commercially worthwhile, transparent to clients and consistent with Australian credit, privacy and consumer laws.

Referral Agreement Checklist for Mortgage Brokers

A mortgage broker referral agreement should separate the sales process from the referral process so everyone knows who is responsible for compliance, client communications and payment.

In practice, a referral partner might be an accountant sending business clients to a broker, a buyers agent introducing pre-approval prospects, a financial planner identifying a refinancing need, or a broker referring a client to another specialist for commercial finance. The arrangement may look informal at first, especially if it starts with a trusted contact. Once money is being paid for introductions, it needs clear written rules.

A finance referral agreement in Australia should usually address the following points:

• Who the parties are: identify the broker, the referrer, any company or trading entity, and the relevant ABN or ACN.
• What counts as a referral: define whether a referral means a name and phone number, a booked appointment, a completed application, a loan settlement or another event.
• When the referral fee is earned: state whether payment is triggered by settlement, approval, first meeting, or another measurable milestone.
• Fee amount and calculation: specify whether the fee is fixed, percentage-based, tiered, recurring or capped.
• Disclosure obligations: explain what the client must be told about the fee, who tells them and when.
• Privacy consent: require the referrer to obtain permission before sharing the client's personal information.
• Permitted conduct: set clear boundaries on what the referrer can and cannot say about finance products, eligibility, approval prospects or lender recommendations.
• Lead quality rules: describe the information that must be collected and when a lead can be rejected.
• Record keeping: require notes, consent records, disclosure records and referral source details to be retained.
• Confidentiality and data security: control how client details, commission reports and business information are handled.
• Termination rights: allow either party to end the arrangement, especially for compliance concerns or poor lead quality.

If the parties are relying on the limited credit referral exemption under the National Consumer Credit Protection Regulations 2010, the agreement should also deal with the mechanics of that pathway. At a high level, it should record the written agreement or written offer between the licensed broker and the referrer, limit the referrer's conduct to specified introduction activity, require the referrer to disclose any benefit or indirect remuneration at the time of the referral activity or when obtaining the consumer's consent, require the consumer's consent before details are passed on, and restrict the information provided to the consumer's name, contact details and, where appropriate, a short description of the purpose for which the consumer may want credit or a consumer lease. It should also require the referrer to pass on those details within 5 business days after informing the consumer, prohibit the referrer from charging the consumer a fee for giving the broker their name, address or contact details, and confirm that the referrer's business is not principally lead generation. On the broker side, the agreement should require the licensee to keep a referrer register and to contact the consumer within the applicable 10 business day period if relying on that pathway.

The safest starting point is to define the arrangement as an introduction only, unless the referrer is properly licensed or authorised to give credit assistance. A casual phrase like 'send me anyone looking for a home loan' can cause problems if the referrer then starts discussing borrowing capacity, product features or whether a client is likely to be approved.

The agreement should also match the way the business actually operates. If the broker only pays once the lender has settled the loan, the agreement should not imply the referrer is paid on application or approval. If the referrer is expected to send leads through a CRM or online form, that process should be documented so there is no later dispute about attribution.

How Referral Fees Should Be Structured

A referral fee structure works best when it rewards genuine, consent-based introductions rather than pressure tactics or exaggerated promises.

There is no single right model for a broker referral fee agreement. The right structure depends on the type of referral partner, the value of the opportunity, the broker's commission model, the level of work the referrer performs and the compliance risk involved. The agreement should make the payment model easy to verify without relying on memory or goodwill.

Common structures include:

• Fixed fee per settled loan: the referrer receives a set dollar amount once the client's loan settles. This is simple and reduces disputes about commission calculations.
• Percentage of upfront commission: the fee is calculated as a percentage of the broker's upfront commission from the lender or aggregator. This can align the fee with the loan value, but it requires clear reporting.
• Tiered fee: the fee increases after a certain number of successful referrals or based on loan size. This can motivate referral partners but needs careful drafting to avoid aggressive lead generation.
• Lead fee: the referrer is paid for each qualified lead, regardless of settlement. This can be useful for marketing arrangements, but it creates a higher risk of poor quality or non-consented leads.
• Reciprocal referral arrangement: each party agrees to refer suitable clients to the other without a cash fee, or with fees on both sides. Disclosure and conflict management still matter.

For many mortgage brokers, payment on settlement is the cleanest model. It links payment to a real commercial outcome and reduces the risk of paying for stale, duplicated or uncontactable leads. If the broker wants to pay for booked meetings or qualified enquiries, the qualification criteria should be very precise.

A strong mortgage referral contract might define a qualified lead as someone who has expressly agreed to be contacted, provided accurate contact details, indicated a genuine interest in discussing finance and falls within the broker's target market. For unlicensed referrers relying on the limited credit referral exemption, the required referral information should usually be limited to the consumer's name, contact details and a short purpose description, together with records of consent and referral fee disclosure. More detailed finance information, such as purchase price, loan amount, deposit position, income, expenses or timing requirements, should generally be collected by the licensed broker or by a licensed or authorised referrer under an appropriate compliance framework.

Fee clauses should also deal with the awkward scenarios that often cause disputes. For example:

• the same client is referred by two different partners;
• the client was already in the broker's database;
• the client contacts the broker directly after seeing the referrer's marketing;
• the loan is approved but never settles;
• the loan settles, then is clawed back or refinanced shortly afterwards;
• the referrer is no longer in business when the fee becomes payable.

Clawback is especially relevant in mortgage broking because brokers may be exposed to commission clawback under their aggregator or lender arrangements. If a lender claws back some or all of the broker's commission, the referral agreement should say whether the referral partner must repay any corresponding amount or whether the broker bears that risk.

GST should also be handled carefully. The agreement should state whether fees are inclusive or exclusive of GST, whether a valid tax invoice is required and when payment will be made after invoicing. This is a commercial drafting point, not tax advice, but unclear GST wording can turn a simple referral arrangement into a payment dispute.

Disclosure, Licensing and Client Trust

Referral fees should be disclosed in a way that clients can understand before they rely on the introduction or proceed with the broker.

Mortgage brokers operate in a regulated credit environment. Depending on the facts, the National Consumer Credit Protection Act 2009, the National Credit Code, ASIC regulatory guidance and Australian Credit Licence or credit representative obligations may be relevant. Brokers also need to consider their best interests duty and conflict priority obligations when providing credit assistance to consumers in relation to home loans.

A referrer who merely introduces a potential borrower to a licensed broker may not need to hold an Australian Credit Licence if the arrangement fits within a limited referral pathway and the referrer does not provide credit assistance. However, the line can be crossed quickly. A referrer who comments on which lender is best, compares loan features, suggests a client will be approved, recommends refinancing, or collects detailed information to assess suitability may be doing more than making an introduction.

Your referral partner agreement for finance should clearly restrict the referrer from:

• providing credit assistance unless they are properly licensed or authorised;
• recommending a particular loan, lender or credit product;
• suggesting that approval is guaranteed or likely;
• describing themselves as part of the broker's business unless that is accurate;
• using the broker's branding without approval;
• making promises about interest rates, borrowing capacity or loan terms;
• charging the client a fee for the referral unless expressly permitted and disclosed.

Disclosure should not be buried or treated as a technical formality. A client deciding whether to speak with a broker is entitled to know that the person making the introduction may be paid. A simple disclosure might say that the referrer may receive a referral fee if the client proceeds with finance through the broker. The exact wording and timing should match the arrangement and the broker's compliance framework.

The agreement should allocate responsibility for disclosure. In many arrangements, the referrer discloses the fee or other referral benefit before passing on the client's details, and the broker confirms the disclosure when contacting the client. Where the limited credit referral exemption is being relied on, the referrer should disclose any relevant benefit or indirect remuneration to the consumer at the time of the referral activity or when obtaining consent, and the broker should also make the required follow-up contact and disclosure after receiving the referral. Later disclosure by the broker is not a substitute for the referrer's required disclosure at the referral stage. The agreement should require evidence that disclosure happened, such as a consent checkbox, email record, call note or signed acknowledgement.

Trust is not just a legal issue. A client who discovers a hidden payment after the loan process starts may question whether the referral was made in their interests. That concern can damage the broker, the referrer and any long-term relationship between them. Clear disclosure can actually strengthen the relationship because it removes uncertainty and shows the arrangement is professional.

The agreement should also be consistent with any aggregator, franchise, panel lender or industry association rules that apply to the broker. Many brokers operate under external compliance frameworks that may impose extra requirements for referral partners, record keeping, approved marketing material or fee sharing. A contract that ignores those rules may be difficult to use in practice.

Lead Quality, Privacy Consent and Misleading Claims

Lead quality rules and privacy consent should be built into the referral process before any client details are shared.

Referral arrangements often fail because the parties focus on the fee and ignore the quality of the lead. A broker may expect warm, permission-based introductions from clients who actually want finance help. The referrer may think any name, mobile number or social media enquiry is enough. The agreement should close that gap.

Good lead quality clauses can cover:

• Consent: the client must have agreed to be contacted by the broker.
• Accuracy: contact details and permitted basic information must be current and collected honestly.
• Exclusivity: state whether the lead can be sent to other brokers or lenders at the same time.
• Duplication: set a process for dealing with leads already known to the broker.
• Time frames: require prompt referral after consent is obtained, so leads are not stale.
• Minimum information: list the details needed before a lead is accepted, keeping within the limits that apply to the referrer's role.
• Rejection rights: allow the broker to reject leads that are incomplete, non-consented, misleading or outside target criteria.

Privacy is a major issue because referral partners often handle names, phone numbers, email addresses, employment details, property goals and sometimes sensitive financial circumstances. The Privacy Act 1988 and the Australian Privacy Principles may apply depending on the parties and the scale or nature of the business. Even where a small business is not covered in every respect, good privacy practice is expected by clients and commercial partners.

The safest process is for the referrer to obtain clear consent before passing on personal information. That consent should explain who will receive the information, why it is being shared and that the broker may contact the person about finance services. If the lead is collected through a website form, landing page, event registration, chatbot, social media campaign, call centre or referral program terms, the wording should be checked carefully.

A practical consent statement might cover:

• the name of the broker or broking business receiving the referral;
• the purpose of the referral;
• the fact that the broker may contact the person by phone, email or SMS;
• whether the referrer may receive a fee if the person proceeds;
• where the person can find privacy information or ask questions.

The agreement should also prohibit the referrer from buying lists, scraping data, using unclear opt-ins or passing on details collected for a different purpose. If electronic marketing is involved, the Spam Act 2003 may also be relevant, especially where commercial emails or SMS messages are sent without proper consent or unsubscribe options.

Misleading representations are another common risk. The Australian Consumer Law prohibits misleading or deceptive conduct in trade or commerce. For a mortgage referral arrangement, that means referrers should not make claims that create a false impression about the broker, the finance process or the client's prospects.

Problem statements can include:

• 'You are guaranteed approval';
• 'This broker gets the lowest rates in Australia';
• 'You will definitely be able to borrow more';
• 'There is no cost or commission involved' when a referral fee is being paid;
• 'We are the broker's finance team' when the referrer is independent;
• 'The bank has already pre-approved you' when no assessment has occurred.

Your agreement should require the referrer to use approved wording for emails, scripts, landing pages, referral program terms and social posts. If the referrer wants to run paid ads or co-branded campaigns, the broker should have approval rights before anything goes live. This helps protect both parties from accidental overstatements and keeps the client experience consistent.

Confidentiality also matters. The broker may share commission statements, settlement updates or CRM notes to explain referral fee calculations. The referrer should only receive what they need to verify the fee, not unnecessary financial or credit information about the client. A carefully drafted reporting clause can balance transparency with privacy.

FAQs

Can a mortgage broker pay a referral fee in Australia?

Yes, a mortgage broker can generally pay referral fees, but the arrangement needs to comply with credit licensing obligations, disclosure requirements, privacy rules and any aggregator or lender conditions. The fee should be transparent and should not encourage misleading conduct or unsuitable credit assistance.

Does a referrer need an Australian Credit Licence?

A referrer may not need an Australian Credit Licence if they only make a limited introduction and do not provide credit assistance. The risk increases if they discuss loan suitability, recommend products, compare lenders, collect detailed finance information to assess the lead or suggest a client will be approved. The agreement should keep the referrer's role narrow unless they are licensed or authorised.

When should the client be told about the referral fee?

The client should be told before the referral affects their decision to proceed with the broker. Where the limited credit referral exemption is being relied on, the referrer should disclose any referral benefit at the time of making the referral or obtaining consent, and the broker should also make the required follow-up disclosure when contacting the client. The key is that disclosure is clear, timely and recorded.

What should a broker do if a referral partner sends poor quality leads?

The broker should rely on clear lead criteria in the agreement and reject non-compliant leads. The contract can also allow payment suspension, extra training, audit rights or termination if the referrer repeatedly sends stale, duplicated, non-consented or misleading leads.

Can referral partners use the broker's logo or marketing material?

Only if the broker permits it. The agreement should control brand use, require approval for marketing material and ban claims that suggest the referrer is an employee, representative or credit adviser of the broker unless that is accurate.

Key Takeaways

• A mortgage broker referral agreement should define the referral, fee trigger, payment process, disclosure requirements and lead quality standards.
• If relying on the limited credit referral exemption, the agreement should keep the referrer's role narrow, require consent and benefit disclosure at referral time, limit the information passed on and include the broker's register and contact obligations.
• Referral fees are usually safest when tied to settlement or another clear milestone, with rules for duplicates, existing clients and commission clawback.
• Referrers should not give credit assistance, recommend loans, collect detailed suitability information or make approval promises unless they are properly licensed or authorised.
• Clients should be told about referral fees clearly and early, with records kept to show disclosure and consent.
• Privacy consent, approved scripts, marketing controls and Australian Consumer Law compliance help protect client trust and reduce referral risk.

If you are setting up referral fees for a mortgage broking business, Sprintlaw can help with your referral agreement, limited credit referral process, privacy consent wording and marketing terms. Call 1800 730 617 or email team@sprintlaw.com.au for a free, no-obligations chat.