Here's why you might not want that free trip to Fiji

"I'd like to get a new home loan and go to Fiji". That's the current pitch on Kiwibank's website.

Wouldn't we all. The Fiji bit, I mean.

Well hold your coconuts, because all you have to do is show up with a 20 per cent deposit, borrow $250,000 and get your application in by the end of February.

Whoops, I just missed the deadline. On purpose actually, as I can't stand the thought of giving any more publicity to such ridiculous offers.

Tempting, enticing and dreamy marketing it might be, but it deserves a cold hard stare.

It reminds me of a time 15 years ago, when UK lender West Bromwich offered a "Brum Brum" mortgage. It came with a free Rover 25 car. This was part of the phase in financial services marketing trends when you couldn't buy anything without a flat-screen telly arriving. The car blew the mortgage markets mind and made headlines. It was worth £8,000, or the equivalent of NZ$22,000 at the exchange rate back then. You had to borrow NZ$250,000 and it equated to 9 per cent of the value of the loan.

Those numbers will make most of us whistle. Goes to show how negotiable banks can be, but it didn't look so appealing when they were offering the same Rover 25 on a loan five times the size. It's a game of swings and roundabouts. Some people get so giddy they forget to do the analysis.

Those of us who worked in this era are certainly not saints. I can recall the endless hours spent with oversized mugs of Starbucks coffee, designing campaigns where you received champagne and salmon with a Christmas investment.

We even sold BOGOFFs, buy-one-get-one-free investments and muddied it further with a Fortnum & Mason hamper. There's no hiding from the shame of the 1990s. Did anyone really care if Japanese Smaller Companies was a good investment theme when they were blinded in the headlights with freebies?

I love a competition or a giveaway and still admire a slick marketing campaign, but I thought this era in financial services was gone. We don't incentivise sales staff with trips to Fiji anymore, so don't incentivise your customers, either. It's not a big leap to make. How would you feel if a reverse-equity mortgage provider enticed your parents into borrowing $250,000 with a Fiji holiday?

What if a fund manager offered a Fiji holiday if you switched your $250,000 Kiwisaver balance from another provider?

Then there are payday lenders. Fancy a fast-food voucher with your 700 per cent annualised interest rate?

At what point does it stop feeling exciting and start feeling a bit icky and wrong?

We are post the Aussie Royal Commission in banking. We are post New Zealand banks escaping an inquiry with a load of wise-sounding reasons, despite identical ownership. We are in a new era; one of responsibility, client needs being paramount and acting in everyone's best interests.

Or are we?

These marketing campaigns are not wrong in a legal sense – just wrong in a customer-care sense.

Financial products rule our lives. They're very personal and quite stressful to deal with. We are signing legal contracts that last for many years and we want certainty the institution and the person on the other side of the desk had our very best interests at heart.

If you're the director of a financial institution, every single transaction needs to pass the "would I tell my mum to do this" test. Legal tests aren't enough these days and struggle to stand the test of time in the eyes of customers.

Tips for free gifts

1. If you're being offered a gift, you are paying for it.

2. Even if you're not paying, someone else is - other customers. You will be that other customer soon enough. Translate what that says about the institution you are dealing with.

3. Always imagine that same value of cash landing on your doorstep. When you pick up the notes, would your first thought be a holiday to Fiji?If not, it's not the right offer for you.

4. Always ask for a cash alternative

5. Always ask for fees to be removed, legal fees to be paid or valuation costs, before accepting a free mortgage gift.

6. Visit a mortgage broker and make sure there isn't a better option with a lower rate. The best scenario is the lowest amount borrowed, with the

lowest costs at the lowest rate. Gifts are bottom of the heap.

7. Check the strings. Most will lock you in for a set timeframe and will have a cash-clawback if you leave early.

8. Compare the size of your lending to the size of the gift. One size doesn't fit all. Why should someone borrowing $250,000 get the same size gift as someone borrowing $350,000?

9. Remember, post Fiji, there's an insurance bill and rates bills. Wouldn't it be nicer to get those paid and go on a holiday of your own choice?

10. The cleaner the offer the better – straight talking financial companies convert everything to cash and are upfront about costs.

Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions in this column represent her personal views. They are general in nature and are not a recommendation, opinion or guidance to any individuals in relation to acquiring or disposing of a financial product. Readers should not rely on these opinions and should always seek specific independent financial advice appropriate to their own individual circumstances.