Banks tardy on making changes to clawback policies
Only one of the major banks appears to have made changes to its clawback policy despite it being one of the 14 recommendations in last year’s Commerce Commission’s report into retail banking competition the Government is implementing.
Monday, September 1st 2025, 9:31AM 
3 Comments
by Sally Lindsay
The ANZ has dropped its maximum clawback period for adviser commissions from 27 months to two years, with the clawbacks now diminishing on a pro-rata basis every 30 days.
Other banks have done nothing and one adviser says they continue to make excuses that they are reviewing their respective clawback policies.
“This continued delay feels increasingly like a slap in the face to the mortgage adviser industry which help lenders like the ASB grow their mortgage book annually,” the adviser says.
“Sadly, the ASB doesn’t appear to value the business it receives from the adviser channel given its obvious lack of urgency in reducing existing adviser clawbacks periods.”
This is despite the Commerce Commission saying in April it was pleased with banks progress on shifting to a monthly pro-rata clawback model.
Commission chairwoman Anne Callinan said at the time one of its focuses was on clawbacks, particularly how they may influence switching behaviour.
“We appreciate that some clawback is justified where a customer leaves in the very early term of a mortgage,” Callinan said. “But we recommend that clawback of commissions are pro-rated, reduced monthly, and there should be no clawback of commissions after two years.”
The commission says some clawback practices impose unjustifiable costs on consumers looking to switch lender. Competition will be promoted if consumers face lower and more certain costs when switching home loan providers, it says.
Squirrel Mortgages chief executive David Cunningham says policies at all banks differ and it is a problem.
Some banks apply rules such as 100% clawback within six months; 75% clawback seven-12 months; 50% clawback 13-18 months; 25% clawback 19-24 months; or 100% clawback 0-15 months; 50% clawback 15-26 months.
“This step approach many banks still apply has elements of unfairness. It’s more the smooth (rather than stepped) pro-rata clawback that should be implemented.”
Cunningham says if every bank had the same ‘rule’ it would make things easier to explain to customers who get confused and often upset when confronted with a clawback account.
“All banks need to move but most haven’t yet.”
The commission says the existing lengthy clawback periods are an anti-competitive practice that deters borrowers from refinancing, especially when customers switch lenders.
“Clawback frameworks varied significantly between banks making comparisons difficult.
“The existing system creates a barrier for customers looking to refinance their loans within the clawback period, forcing them to pay a prohibitive one-off cost.”
It says the longer clawback periods also place mortgage advisers at risk, as they can be forced to repay commissions when clients switch lenders or refinance, even when it is in the client's best interest to do so.
The new system banks need to follow makes it easier for borrowers to understand and compare loan offers, as the amount they might have to repay is now more predictable and directly reflects the time remaining on the clawback period, the commission says.
Financial Services Complaints Ltd said it receives about 12 to 15 complaints a year about mortgage advisers seeking to recover clawed back commission.
It has a consumer guide to help explain what claw back fees or fees for service are, and why advisers may charge them in certain situations. “We believe this has helped improve understanding and contributed to a noticeable drop in complaints."
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My concern is that with the increased use of AI and bank complex algorithms (and open banking), home loans (and in fact any bank communication) will be done increasingly online. This could remove the Mortgage Adviser from the process completely.
Customers are already getting paid more than mortgage advisers for switching their home loans to other banks (cashback of up to 1%, while commission is only 0.55% - 0.7%)!
Why have successive NZ governments allowed bans to wield such power, when overseas banks have welcomed mortgage advisers?
And yet advisers are not doing anything about it. I have suggested this before: if all mortgage advisers went "on strike" (didn't submit any applications for 2 weeks) the banks would be totally overrun by customers seeking home loans. They couldn't cope, and would soon realise the value that mortgage advisers add to their profit line.
We are being taken for a ride, allowing the banks to profit at our expense.
It does not take 185 days to review something so clearly ASB doesn't want to follow ANZ’s lead and the same goes for the other banks also.
With the Commerce Commission stating the existing lengthy clawback periods are an anti-competitive practice that deters borrowers from refinancing, especially when customers switch lenders it's a really bad look now for ASB and the other banks that they havent followed ANZ after 185 days.
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This was a big part of mortgage advisers on going relationship with their clients’ which advisers can still have do via some other banks.
ASB’s move to do this was clearly to save commissions and try to severe the adviser /customer relationship and ASB said at the time “this is what customers want “but in reality, most ASB customers take offence to this process and seek out advice anyway.
In my 24-year history as a Mortgage adviser, trends reflect that any bank that becomes abrasive or anti adviser or anti customers seeking independent advice tend to lose market share in this area and maybe justifiably so.