Break fee investigation yields no result for borrowers

After over a year of investigation, the Commerce Commission has essentially concluded there's been no profit gouging by banks in New Zealand when charging break fees on mortgages.

Last year, ComCom reasoned that break fees charged on the basis of retail interest rates by banks such as ASB, SBS Bank, BNZ and National Bank were reasonable, but it needed to further investigate fees charged by banks on the movement in wholesale rates.

A year later, it was revealed that even such fees were reasonable and so the investigation on ANZ, Westpac and GE has been closed with no enforcement action.  

In the case of Kiwibank and HSBC, ComCom issued a warning because the formulae they used until mid-2009 had technical deficiencies, which resulted in higher fees. ComCom says Kiwibank made ex-gratia payments totalling NZ$689,000 to its customers while HSBC paid NZ$113,000.