How commercial finance brokers get paid — the whole answer

A commercial finance broker is normally paid by the lender, not by you — a commission built into the economics of the deal rather than a fee you write a cheque for separately. How much that commission is, and whether it keeps being paid for as long as you hold the facility, is exactly the question a landmark UK Supreme Court case forced into the open in 2025. New Zealand business lending sits largely outside the consumer credit law that case was decided under, which is precisely why it's worth asking your own broker directly rather than assuming either way.

Key Takeaways

Why business lending sits outside New Zealand's consumer credit law

New Zealand's Credit Contracts and Consumer Finance Act is the law that imposes responsible lending duties, disclosure obligations, and dispute resolution scheme membership on lenders. Consumer Protection describes it as applying to "those who provide mortgages, loans, agreed overdrafts, Buy Now Pay Later accounts and buying on credit, including truck shops" — a consumer-facing list that doesn't extend to business or commercial lending.

Commercial finance broker Duncan Brown, writing in the NZ Herald, puts it plainly: "Business and commercial lending is not subject to the same scrutiny required for consumer lending", and some banks and finance companies "choose to specialise in commercial lending to avoid getting caught up in CCCFA requirements." He notes that consumer lending — a mortgage, a personal car or boat loan — sits inside the Act's requirements, while business lending on plant, machinery or work vehicles generally sits outside them, to the point that some commercial lenders can offer auto-approvals with no financials required, subject to conditions.

The Act itself has a formal boundary test for this — sections headed "Meaning of consumer credit contract" and "Certain contracts not consumer credit contracts" exist specifically to draw the line between what's in scope and what isn't. Regulation and enforcement of the Act also moved recently, from the Commerce Commission to the Financial Markets Authority, effective 1 July — a change described by one commentator as consistent with the FMA's broader mandate.

New Zealand's separate regulated financial advice disclosure regime is worth knowing too. Where it applies, it requires a financial advice provider to disclose which lenders it deals with — including if it only advises on particular lenders' products, or changes which lenders it works with. Ask your broker this regardless of how the facility is classified: it's a reasonable question whether or not it's a legal requirement in your specific case.

What Johnson v FirstRand actually decided

In August 2025, the UK Supreme Court handed down its decision in three conjoined cases — Hopcraft v Close Brothers, Johnson v FirstRand, and Wrench v FirstRand. The core question was whether a car dealer arranging finance owed the kind of duty that would make undisclosed commission from the lender improper — and the dealer's commission in that case came from the lender for introducing the finance business, not from the customer directly.

The Court set out the general principle first: "a fiduciary's liability to account for profits made in breach of his duties can be avoided if full disclosure (of all material facts) is made and the principal gives his or her fully informed consent" — with what counts as full disclosure depending on the circumstances. But the Court then found the dealer was not a fiduciary to the customer in the first place. Each party — customer, dealer, lender — was acting at arm's length in pursuit of its own interests; the dealer wasn't providing credit brokerage as a distinct service separate from the car sale, and critically, the dealer never gave any express undertaking to put aside its own commercial interest when sourcing finance for the customer.

This is a precise legal distinction worth sitting with: the Court explicitly held that the regulatory regime governing dealers as credit brokers "does not mirror the more rigorous duties of a fiduciary" around excluding self-interest, disclosure, and avoiding conflicts. Being a regulated, licensed intermediary is not the same thing, legally, as owing the customer undivided loyalty. Don't assume a broker's professional registration or licensing automatically means it's legally bound to put your interest ahead of its own commission — ask the question directly instead.

Mr Johnson's bribery and fiduciary-breach claims failed on that basis. But he still won — under a completely different, broader legal test: section 140A of the Consumer Credit Act 1974, the "unfair relationship" provision, which lets a court weigh a wide, fact-sensitive range of factors. The Court was explicit that non-disclosure or partial disclosure of commission does not automatically make a relationship unfair — it's one factor in an overall balancing exercise, not an automatic trigger.

What tipped that balance in Johnson's favour is instructive. The size of the commission was significant: 25% of the amount of credit advanced, and 55% of the total charge for credit — a figure the Court called "a powerful indication" the relationship was unfair. Separately, the documents given to Mr Johnson actively misrepresented the arrangement: they created the false impression the dealer was offering "products from a select panel of lenders" and recommending whatever "best meets your individual requirements," while concealing a commercial tie under which the lender held a right of first refusal on the dealer's finance business. It wasn't the commission existing that mattered most — it was the combination of its size and a document that actively misled the customer about how independent the recommendation really was. That 25%/55% figure is a UK motor finance number from one specific case, not a benchmark for a New Zealand business loan or invoice finance facility — but the underlying test is useful anywhere: is the payment large enough, relative to the deal, that it could plausibly have shaped the recommendation.

The scale behind the UK's clean-up

The reasoning in Johnson sits inside a much bigger regulatory response. The UK's Financial Conduct Authority has specifically named a structure called a discretionary commission arrangement (DCA) — one where "the broker could adjust the interest rate offered to a customer to obtain a higher commission from the lender." That's about as direct a conflict of interest as a commission structure can create: the broker's own pay rises when the customer's rate rises.

The FCA reviewed 32 million motor finance agreements and found widespread failings in how firms disclosed commission payments and the commercial ties between lenders and brokers, concluding that inadequate disclosure meant consumers were less likely to negotiate or shop around, and that many people likely overpaid as a result. Its proposed redress scheme would cover regulated agreements taken out between 6 April 2007 and 1 November 2024 where commission was payable by the lender to the broker, across a market of over 2 million users a year and £39 billion borrowed in 2024 alone. Over 4 million UK consumers have already complained to their finance firm directly; more than 99% of complaints firms considered were rejected, and over 80,000 people escalated to the Financial Ombudsman Service.

One detail worth knowing for a business-lending audience specifically: the FCA's proposed scheme explicitly defines "consumers" to include sole traders and small partnerships — a reminder that regulators don't always draw the consumer/business line the same way a strict company-versus-individual test would.

Three questions worth asking before you sign an authority to act

None of this is a reason to avoid using a broker — a good one saves you time and gets you into a facility that actually fits, and Johnson's own reasoning shows that a broker acting at arm's length for its own commercial interest, disclosed properly, isn't automatically doing anything wrong. But it's worth asking directly, before you sign anything:

1. Who pays you for this deal, and roughly how much? If the answer is vague, or you're told it's "standard" without a figure, push for the actual number. Weigh it the way the Johnson case did — is it large enough, relative to the size of the deal, that it could plausibly have shaped which lender got recommended.
2. Is that a one-off payment, or does it continue for as long as I hold this facility? This matters most on a revolving facility like invoice finance, where the limit grows with your ledger rather than being drawn down once — a one-off placement fee and an ongoing trail create very different incentives over the life of the facility.
3. Would a different lender have paid you a different amount for placing this same deal — and did that affect which one you recommended? This goes directly at the discretionary-commission-style conflict the UK is now unwinding at enormous cost; a broker with nothing to hide should be able to answer it plainly.

A broker who answers all three clearly, without prompting a second or third follow-up question, is giving you more than most borrowers ever think to ask for. That's worth noticing.

Frequently Asked Questions

Is business lending covered by the same rules as a mortgage or personal loan in New Zealand? Generally not. Business and commercial lending on plant, machinery and work vehicles sits outside the scrutiny the Credit Contracts and Consumer Finance Act applies to consumer products, and some lenders specialise in commercial lending specifically because of that difference.

Does being a licensed broker mean it has to recommend what's best for me, not what pays it best? Not automatically. The UK Supreme Court was explicit in Johnson: the regulatory regime that applies to a broker doesn't by itself create the kind of undivided-loyalty duty a fiduciary owes. Ask directly rather than assuming regulation settles the question.

Is a 25% commission a red flag, the way it was in Johnson? That figure came from a specific UK motor finance case and shouldn't be treated as a general benchmark for a business loan or invoice finance facility — but the principle behind it holds anywhere: a commission large enough, relative to the deal, to plausibly shape the recommendation is worth questioning regardless of the exact number.

Does it matter whether my broker deals with a handful of lenders or the whole market? Yes, and it's worth asking plainly which lenders they place business with and why, and whether that's changed recently. If a broker only deals with a limited panel, or has a closer commercial relationship with one lender than another, that's exactly the kind of thing Johnson turned on.

Should I expect a trail commission on an invoice finance facility, or a one-off payment? Ask your broker directly which it is before you sign. The two structures create different incentives over the life of a revolving facility, and there's no reason a straight answer shouldn't be available on request.

Deplexifi arranges business finance across New Zealand, Australia and the UK, and will tell you plainly who pays us and how much before you sign anything — ask us the three questions above and expect a straight answer.

Assuming that because a broker is licensed or regulated, it's legally bound to recommend the lender that's best for you rather than the one that pays it best — the UK Supreme Court explicitly found that regulation alone does not create that duty.

Nothing here is regulated financial advice. Deplexifi arranges commercial finance for businesses — this article describes general lending practice and the published position of the sources listed below, not a recommendation for any individual business.