National Australia Bank has overhauled the clawback rules that will apply to upfront commissions its Advantedge subsidiary pays mortgage brokers for originating home loans.From 12 November Advantedge will extend the clawback period applying to upfront commissions to two years from the current boundary of 18 months.The NAB subsidiary, which markets white label home finance through mortgage broking aggregators, will also increase the percentage of upfront commission it can reclaim from brokers if borrowers decide to refinance with another lender.Under existing arrangements Advantedge can only claw back 50 per cent of the upfront commission, but that will rise to 100 per cent if a broker's client refinances within the first year of the loan.The claw rate drops to 50 per cent if the borrower refinances in the second year of the loan.Mortgage brokers told Banking Day yesterday they were disappointed by the move but acknowledged that the new clawback structure brought Advantedge into line with other arrangements at major bank lenders."It's another kick in the guts for brokers," said Sheyne Walsh, the principal of Sydney-based Kingsbridge Private."But when I look at it objectively, it's probably a fair decision because it aligns Advantedge's clawback provisions with those of the other big lenders.Connective, a national mortgage aggregation network that funds house-branded mortgages through Advantedge, maintains the two-year clawback period was at the "extreme end" of acceptability in the industry."It's not completely out of line with where some other lenders are at," said Connective executive director, Mark Haron."It's certainly at the extreme end of what is acceptable both in a commercial sense and in terms of the ability of brokers to meet consumers' objectives."In its recently published final report a Productivity Commission inquiry into banking competition recommended a statutory limit of two years on clawback periods.The PC argues that clawback periods create incentives for brokers to act in ways that might be counter to customers' best interests.The PC has also called for a ban on brokers seeking to recoup from borrowers the commission income they lose after lenders activate clawbacks.Details of Advantedge's new clawback policy were revealed to mortgage brokers via aggregation networks on Tuesday in a circular sent by general manager, Brett Halliwell.However, NAB elected not to mention the new clawback arrangements in a press release it issued to announce other changes it was making to broker commissions.From 12 November the bank will also change the way it calculates upfront commission brokers receive on home loans.Under NAB's current policy, the upfront mortgage commission is calculated as a percentage of the total approved facility, but this will change to a percentage of the amount actually drawn by the borrower.NAB claims to be the first Australian bank to implement the change, which has been recommended by ASIC and the Productivity Commission."Mortgage brokers play an important role in helping Australians arrange their home loans, and NAB continues to value and support them," said NAB's head of broker partnerships, Anthony Waldron."We recognise that Australians increasingly use mortgage brokers, and we want to continually improve as an industry