In the world of finance, ‘kickback’ is a term that surfaces every so often — usually in connection with controversy or regulatory crackdowns. But for many Australians, the real impact of kickbacks can be confusing, especially as financial products become more complex and opaque. In 2025, with new policy changes and a heightened focus on transparency, it’s crucial to understand how kickbacks work, where they show up, and what they mean for your wallet.
What Is a Kickback — and Where Do They Happen?
A kickback is a payment or benefit received by a person or company in exchange for steering business or favouring a particular product or service. While the term is often associated with outright corruption, in finance, kickbacks can take subtler forms, such as hidden commissions or referral fees embedded in the cost of loans, insurance, or investments.
Common examples in Australia include:
- Mortgage brokers receiving undisclosed commissions from lenders for recommending certain home loans.
- Financial advisers getting ongoing ‘trailing commissions’ from investment funds or insurance products.
- Car dealerships earning incentives from lenders for arranging higher-interest vehicle finance.
While some referral fees are disclosed and legitimate, others can lead to conflicts of interest — with consumers paying more or ending up in unsuitable products.
Policy Shifts: How 2025 Is Changing the Rules
Australia’s financial system has undergone significant reforms in recent years, sparked by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The government and regulators like ASIC have rolled out tighter regulations to stamp out hidden kickbacks and ensure consumers are treated fairly.
Key 2025 developments include:
- Banning of trailing commissions for mortgage brokers — now fully in effect, with brokers required to disclose all fees and act in the best interests of clients.
- Stronger ‘conflicted remuneration’ rules in superannuation and investment advice, targeting payments that might bias advice against clients’ interests.
- ASIC enforcement blitz on undisclosed referral arrangements in the car finance and insurance sectors, with several high-profile fines issued in early 2025.
These changes are designed to make costs clearer and reduce the risk of consumers being steered into products that benefit intermediaries more than the buyers themselves.
Kickbacks in Practice: Real-World Impact for Australians
The impact of kickbacks can be subtle but significant. For example, if a mortgage broker receives a higher commission from Lender A than Lender B, they might recommend a loan from Lender A — even if it’s not the best deal for you. Over the life of a home loan, this could cost you thousands in extra interest.
Recent ASIC case studies in 2025 highlighted issues such as:
- Consumers being sold add-on insurance with car loans, driven by dealership kickbacks, resulting in unnecessary costs.
- Retirees receiving investment advice that favoured products with higher adviser commissions, rather than lower-fee alternatives.
- Small businesses being referred to specific lenders by brokers in exchange for undisclosed referral payments, sometimes resulting in higher fees or less flexible loan terms.
For everyday Australians, the practical takeaway is to ask tough questions: Are you being told about all commissions, fees, and referral payments? Is your adviser or broker acting in your best interests — or their own?
How to Protect Yourself from Hidden Kickbacks
With the finance sector under renewed scrutiny, here’s how you can stay ahead:
- Always ask for a full breakdown of all fees and commissions — don’t assume everything is included in the headline rate.
- Check that your adviser, broker, or dealer is registered and bound by the latest best interest duty obligations.
- Compare products independently, using government sites like Moneysmart or trusted aggregators, to ensure you’re not being steered into a poor-value product.
- If in doubt, get a second opinion or request written disclosure of any payments your adviser receives from third parties.
The landscape in 2025 is much improved, but vigilance is still your best defence against kickbacks eating into your financial future.
