A New Zealand home loan borrower recently lost his dispute over a $2500 fee charged by his mortgage adviser after switching banks. The Financial Services Complaints Ltd ruled that the adviser acted properly, highlighting clear disclosures about potential clawback commissions.
Details of the Borrower’s Case
The borrower first got his mortgage through an adviser in January 2023. The bank paid the adviser a $2500 commission for setting up the loan.
About 18 months later, in August 2024, the borrower asked to top up the loan, but the adviser said it was not possible. By October 2024, the borrower moved his loan to a different bank for better rates.
Soon after, the original bank took back the commission from the adviser. The adviser then billed the borrower $2500 to cover the loss, and by January 2025, a debt collection agency added extra fees.
The borrower complained to Financial Services Complaints Ltd, claiming the adviser had promised free services. He argued he never knew about the fee for switching banks early.
Why the Adviser Won the Dispute
Financial Services Complaints Ltd investigated and sided with the adviser. They found strong evidence that the borrower had been informed multiple times.
The adviser provided documents showing the borrower signed terms that explained the clawback fee if he switched within 30 months. Notes from a January 2023 meeting confirmed verbal warnings about the charge.
In August 2024, the adviser sent a written reminder about the fee when the borrower mentioned shopping for lower rates. The ruling praised the adviser for securing the original loan and being transparent.
This case shows how disputes like this often hinge on clear communication and signed agreements. Borrowers must read all terms before signing.
Financial Services Complaints Ltd does not name parties in such cases to protect privacy.
Understanding Clawback Fees in Mortgages
Clawback fees happen when banks reclaim commissions from advisers if a loan ends early, like when borrowers switch banks or pay off debt ahead of time. Advisers then pass this cost to clients to avoid losses.
These fees aim to cover the work advisers do upfront, such as finding deals and handling paperwork. Banks pay commissions based on expected long-term loans, so early changes trigger refunds.
In New Zealand, clawback periods often last 24 to 36 months. Fees can range from a few hundred dollars to thousands, depending on the loan size.
Recent data from 2025 shows more borrowers facing these fees amid rising bank switches. With interest rates fluctuating, many seek better deals, but overlook hidden costs.
Here is a quick look at common clawback structures from major New Zealand banks:
| Bank | Typical Clawback Period | Fee Calculation Example |
|---|---|---|
| ANZ | Up to 27 months | Full commission if within 12 months, partial after |
| ASB | 24 to 36 months | Pro-rated based on time left |
| Westpac | 30 months | 100% clawback in first year, decreasing yearly |
| BNZ | Up to 36 months | Based on original commission amount |
This table uses general industry data from 2025 reports. Actual terms vary by contract.
Industry Views and Expert Opinions
Nick Hakes, chief executive of Financial Advice New Zealand, supported the ruling. He noted that advisers must disclose fees clearly, and this case followed best practices.
Experts say these fees protect the industry but can surprise borrowers. In 2025, with over 3500 people switching banks monthly, accounting for $2.5 billion in lending, awareness is key.
Some critics argue fees discourage competition, but supporters say they ensure advisers get paid for their efforts. Recent changes by non-major banks have adjusted clawback policies to balance this.
A 2025 report from the Financial Conduct Authority in similar markets showed a 2.4% fee increase for advisers, reflecting rising costs.
Tips for Borrowers Facing Similar Issues
Borrowers can avoid surprises by asking questions early. Always review all documents and understand terms before committing.
If a dispute arises, services like Financial Services Complaints Ltd offer free resolution. They handled similar cases in 2022, where outcomes depended on proof of disclosure.
To protect yourself when switching banks:
- Check your original loan agreement for clawback clauses.
- Ask your adviser about any fees for early changes.
- Compare total costs, including potential penalties, before moving.
- Consider waiting out the clawback period if rates are close.
These steps can save money and reduce stress. In 2025, tools like online rate comparators make it easier to spot deals without hidden fees.
Recent trends show switching can save over $220,000 in interest over a loan’s life, but only if done right.
Broader Impact on Mortgage Market
This ruling comes as bank switching hits record highs in New Zealand. In December 2024, over $2 billion in mortgage debt changed hands, driven by attractive short-term rates.
Experts predict more disputes as borrowers chase savings amid economic shifts. The Commerce Commission encourages competition, but fees like these add complexity.
In related news, some banks now offer cash incentives up to $20,000 for switchers, offsetting potential clawbacks. This creates opportunities but requires careful calculation.
Overall, the case underscores the need for transparency in financial advice. Borrowers should stay informed to make smart choices.
What do you think about clawback fees? Share your experiences in the comments below, and pass this article to friends who might benefit from these insights.
