Bank will no longer pay trail from June 2026
Westpac NZ has confirmed it will scrap trail commissions for mortgage advisers from June 2026.
Advisers will now receive an upfront commission of 0.90% on the value of new loans, replacing the current 0.60% upfront payment and 0.20% trail. The new structure will automatically apply to all new home loan settlements from 1 June 2026.
A 0.30% top-up payment will apply to new loans settled between today and May 31, 2026, effectively bringing total upfront commission to 0.90% during the transition period.
Chris Poledniok, national manager of third party channels at Westpac NZ said the structure “is designed to provide highly competitive pricing, align with evolving industry standards, drive better outcomes for customers, and ensure we’re well positioned to support advisers into the future.”
He also noted that Westpac NZ would be putting more resources into improving turnaround times and investing into digital enhancements.
This ends weeks of speculation over whether Westpac NZ will be scrapping trail for advisers, a move first reported on in early October.
“We have long-standing relationships with advisers and deep respect for the work they do to support our customers," Poledniok told NZ Adviser. "We've listened to adviser head groups and adapted our approach through this process.”
Approach draws criticism from industry
Financial Advice New Zealand has criticised Westpac NZ's decision to force the sale of existing trail commission books rather than allowing them to run off naturally.
FAMNZ managing director Peter White had also advocated for the grandfathering of existing trail.
FANZ CEO Nick Hakes (pictured) said that this approach is “inconsistent with market practice”, where trail is usually allowed to run off over time.
“Westpac had a choice, and it opted for a model that is more financially beneficial to its balance sheet, reducing liabilities and improving its financial position,” Hakes said. “Citing the Commerce Commission’s focus on pricing competition as a reason for this, lacks merit.”
Hakes said trail income accounts for 25-50% of annual revenue for some firms, and helps sustain their ability to deliver ongoing service to clients. He warned the removal threatens the viability of small and medium-sized advice businesses and risks reducing access to quality financial advice, particularly in underserved communities.
Advisers will now have to rethink their business models, potentially offering clients a choice between ongoing support with trail-paying lenders or limited support for two years post-refinance with Westpac.
Hakes also noted that globally, the financial advice profession is shifting away from upfront commissions toward ongoing remuneration models to support client engagement in the long-term.
“Advice business models are now reflective of a broader move toward transparency, sustainability, and client-centric advice,” Hakes said.
"Westpac's removal of trail commissions runs counter to these global trends and in particular Australian banks, potentially discouraging the evolution of advice practices, and is at odds with their Australian-owned parent.”
He also raised concerns about Westpac's move to digital refixing via apps, warning it risks reducing competition and limiting consumer choice, as financial advisers are best placed to offer impartial advice. Westpac customers can now refix their loan through Westpac One without consulting an adviser.
However, Financial Advice NZ welcomed Westpac's adoption of the Commerce Commission's Recommendation 10 by moving to a month-by-month pro-rata clawback structure.
Westpac NZ had been in talks with broker groups on the move prior to the announcement. Hakes acknowledged Westpac’s move towards more open communication with advisers and aggregators, but still describes the scrapping of trail as disappointing.
“While we appreciate Westpac’s willingness to listen to feedback, it is disappointing that a significant bank lender will no longer recognise the ongoing time and cost required of advisers to service customers beyond the initial advice,” he said.
“Financial Advice New Zealand urges all lenders to recognise the value of ongoing advice and ensure remuneration models reflect the real work advisers do.”
