Beyond the Handshake: Structuring Legally Compliant and High-Performance Referral Agreements

The Australian mortgage broking landscape has matured. What used to be a relationship-driven sector powered by “mates rates” and verbal agreements is now a highly regulated financial ecosystem. With the National Consumer Credit Protection (NCCP) Act and the Best Interests Duty (BID) casting a long shadow, the casual passing of a name and number on a sticky note presents an unacceptable risk profile.

Formal agreements aren’t just bureaucratic paperwork; they are strategic assets. They ensure data sovereignty under the Australian Privacy Principles (APPs), protect your commissions, and provide the structural clarity required to scale.

The casual nature of historical referral arrangements creates three primary vulnerabilities for the modern broker:

1. Regulatory Fragility: Verbal agreements cannot effectively memorialize the warranties required to prove a referrer is acting within the “Spotter” exemptions of Regulation 25(5).
2. Commercial Ambiguity: Without a written definition of a “successful referral” (e.g., does payment trigger at submission or settlement?), disputes are inevitable.
3. Data Liability: The informal passing of client details is a potential breach of the Privacy Act 1988 if proper consent protocols are not established.

Most of your partners (accountants, real estate agents) are not credit licensees. For them to refer business legally, they must operate under the Regulation 25(5) exemption. This strictly limits their activity to:

• Informing the consumer that you can provide credit assistance.
• Giving you the consumer’s contact details (within 5 business days).
• Disclosing to the consumer any benefit they will receive.

The Mandatory Disclosure Script (Regulation 9AB(6))

Perhaps the most critical operational requirement is the specific language you must use. If you contact a consumer following a referral, you must begin the discussion with a specific statement.

Note: This disclosure must happen at the beginning of the conversation. It is a strict condition of your license.

Your written agreement must move beyond a simple commission sheet. It needs to be a comprehensive commercial instrument. Here are the essential clauses:

Clause	Purpose	Best Practice Tip
Payment Trigger	Defines when money changes hands.	Define “Successful Referral” as Loan Settlement, not application submission.
Clawback Indemnity	Protects you if the loan refinances early.	Include a “Set-Off” clause allowing you to deduct clawbacks from future referral payments.
Privacy Warranty	Ensures APP compliance.	Referrer must warrant they have obtained specific consent to share the client’s data with you.
Termination	Clarifies client ownership if you part ways.	State clearly that trail commission ceases if the agreement is terminated for cause or misconduct.

A legal document is static; a referral network is dynamic. To create a high-performance network, you must leverage technology to create transparency and stickiness.

Leverage Partner Portals

Modern CRMs like Salestrekker and Mercury Nexus offer dedicated partner portals. These allow referrers to:

• Input leads directly (ensuring accurate data capture).
• Track the status of their referrals (e.g., “Conditional Approval”) without needing to call you.
• View commission statements automatically.