Watchdog to check out Kiwibank's loan pledge

By KEVIN TAYLOR

Kiwibank's much-touted mortgage guarantee will come under the spotlight of a Commerce Commission probe after a complaint from a competitor.

But the competitor, Wizard Home Loans, says the damage has been done and the commission should have moved faster.

The commission has taken a month to decide whether to investigate Wizard's fair trading complaint.

A spokeswoman could not say yesterday how long the investigation would take, but indicated it was likely to be months.

The complaint followed state-owned Kiwibank's advertising campaign launched last month which guaranteed that its mortgage deals would be better than those of the big five banks over the next six years.

Kiwibank would refund the difference if a home loan customer was better off elsewhere during the period.

The head of Wizard New Zealand, John Grant, said yesterday a legal opinion from KPMG supported the view that the bank's advertising breached the Fair Trading Act.

More than 60 mortgage lenders were operating in New Zealand but Kiwibank's "so-called" guarantee applied only to the big five banks and even then excluded ASB's Bank Direct.

Grant said the Kiwibank advertising implied it offered the cheapest home loans.

"But when you look behind it there are so many conditions that are applicable that it's not guaranteeing it is the cheapest home loan at all."

Kiwibank spokesman Bruce Thompson said the advertisements had gone through a robust checking process.

"We are confident we have got a safe product, but if it's to be investigated we will co-operate fully."

He said Kiwibank considered its competition was the other nationwide banks.

Further reading
nzherald.co.nz/kiwibank