Commission in Australia 2025: How It Works & What’s Changed

Commission is a term that pops up across countless industries in Australia—real estate, finance, insurance, retail, and more. But how does it actually work, and what should you watch for in 2025? With recent regulatory changes and a renewed focus on transparency, it’s never been more important for Australians to understand commission structures and their impact on your financial decisions.

What is Commission and Where Does It Apply?

At its core, a commission is a payment made to an individual or business for facilitating a sale or transaction. In Australia, commissions are common in:

• Real estate: Agents typically earn a percentage of the property sale price.

• Finance and insurance: Brokers and advisers receive commissions for selling loans, superannuation, or insurance products.

• Retail and sales roles: Employees can earn commissions on top of their base salary for meeting sales targets.

Commission structures can be straightforward (a flat percentage) or complex, involving tiers, bonuses, or trailing commissions that continue over time.

Key Policy Updates for 2025: Transparency and Consumer Protection

Recent years have seen a wave of regulatory reforms aimed at making commissions fairer and more transparent. In 2025, some of the most notable updates include:

• Ban on Conflicted Remuneration: Following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, ASIC has tightened rules, particularly in financial advice. Commissions that could influence an adviser’s recommendations are largely banned.

• Mortgage Broker Reforms: Since 2023, mortgage brokers must disclose how they’re paid and are now legally obliged to act in the best interests of the client. Trail commissions on new loans have been largely phased out, shifting focus to upfront commissions and fee-for-service models.

• Real Estate Commission Caps: While there’s no national cap, some states have introduced guidelines and increased disclosure requirements to help sellers compare agent fees more easily.

• Insurance Advice Changes: Ongoing reforms have limited commissions on life insurance and banned them entirely for general insurance advice, encouraging a shift to fee-based advice in many cases.

These changes are designed to align industry incentives with consumer interests, reducing the risk of biased recommendations and hidden costs.

Commission in Action: Real-World Scenarios

To see how commission works in practice, let’s look at a few examples Australians might encounter in 2025:

• Buying a Home: A Sydney property sells for $1.2 million. The agent’s commission is 2%, or $24,000, typically paid by the seller. Some agencies now offer fixed-fee services as a transparent alternative.

• Getting a Home Loan: A mortgage broker helps you secure a $600,000 loan. The lender pays the broker an upfront commission of about 0.65% ($3,900). Since trail commissions have been mostly abolished, brokers are increasingly transparent about how they’re paid.

• Life Insurance Advice: A financial adviser arranges a life insurance policy. As of 2025, upfront and ongoing commissions are capped at 60% and 20% of the premium, respectively, and must be clearly disclosed to you.

In all these cases, disclosure requirements mean you should receive clear information about any commissions and how they may influence the service you receive.

Smart Strategies: How to Protect Your Interests

Commissions aren’t inherently bad, but hidden or excessive commissions can undermine your financial outcomes. Here’s how to stay on top of commission-based transactions in 2025:

• Ask for full disclosure: Don’t hesitate to request a breakdown of commissions and fees before engaging a service provider.

• Compare service models: Some professionals now offer fee-for-service arrangements as an alternative to commissions—especially in financial advice.

• Understand incentives: Consider how a commission might influence the advice or product being offered. Are there comparable options with different fee structures?

• Check for compliance: Ensure your broker, adviser, or agent is licensed and complies with current ASIC guidelines and industry codes of conduct.

Proactive consumers are empowered consumers—transparency is your best friend in any commission-based transaction.

The Bottom Line

As Australia heads further into a consumer-first era, understanding how commissions work—and how recent reforms affect you—is essential. Whether you’re buying property, taking out a loan, or seeking financial advice, knowing the right questions to ask and the red flags to watch for can make a tangible difference to your financial wellbeing.