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Analysis: Inside the lucrative mortgage referral program

The royal commission has heard how a major bank pays its introducers up to 60 basis points commission for referring mortgage customers.

NAB’s executive general manager of broker partnerships, Anthony Waldron, appeared before the royal commission on Tuesday where he was questioned about the bank’s home loan introducer program.

Mr Waldron revealed that the program, which has been operational for more than 10 years, had 8,000 introducers “at its peak” between 2013 and 2016. It is during this period in which some instances of misconduct are alleged to have occurred.

The program is still operational today and has approximately 1,400 introducers. NAB pays an introducer a commission if the loan is applied for, approved and drawn down.


Introducers who referred existing customers to the bank generally receive approximately 0.4 per cent for providing a name and a number. No commission is paid if loan is under $50,000.

Not unlike the mortgage broking industry, the referral space has become increasingly sophisticated in recent years; aggregator-like businesses work as intermediaries between individual referrers and the bank. These groups are known as “national referral partners” and generally receive a commission of 60 basis points for giving NAB a name and a number.

The business is highly lucrative, especially given the low level of entry required to become a NAB introducer. Unlike mortgage brokers, referrers do not operate under the NCCP and are only allowed to “spot and refer” leads to the bank.

According to ASIC, the number of referrals being made to lenders, either by the referrer directly or through a referrer aggregator, increased by 22.6 per cent between 2012 and 2015.

Nexus Partners is a referral aggregation group that provides Australian businesses with a “dedicated referral management system”. The company views mortgage brokers and aggregators as its biggest competitors.

The Nexus Partners website states that “a growing number of mortgage aggregators are now wholly or partially owned by one of the big banks who have been acquiring these businesses in recent years. Our business remains truly independent, and something we believe has become a significant point of difference in the way we provide services for our referral partners and clients”.

The website continues: “We are not mortgage brokers; however, we hold an Australian credit licence and have the same compliance and regulatory requirements as a mortgage broker or any service provider in the mortgage industry.”

The company states that “a fact often lost on consumers is that a mortgage broker does not have the capacity to approve a loan for a client on behalf of the lender”.

The referral aggregator describes brokers as “an order taker for the bank”.

“They speak to the client, they complete the paperwork, but ultimately the lender will make the decision on whether a loan is approved for a broker’s client.”

Nexus describes the revenue potential of its model as “compelling” and says that it demonstrates “a greater return for the time you in invest as compared to other third-party mortgage channels”.

By contrast, brokers need to put in far more work, adhere to an ever-increasing compliance framework and meet responsible lending obligations.

NAB has tightened its procedures around who it brings into the referral ring following the misconduct that occurred between 2013 and 2016. For example, the bank only allows certain businesses and professions such as financial planners, accountants, property developers, solicitors and architects to become referrers.

While this was the case between 2013 and 2016, Mr Waldron admitted this week that the rule was not strictly adhered to.

The commission heard one example of a gym owner who had been referring customers to NAB and receiving a commission for doing so.

Interestingly, former mortgage brokers are not eligible to become NAB home loan introducers, but they may be able to refer commercial deals to the bank.

The commission also heard that 45,960 home loans were approved by NAB between 2013 and 2016 via its introducer program, with a total value of $24 billion. The bank paid approximately $100 million in commissions to its referrers over the three-year period.

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