Heartland Bank enters broker market

If this is similar to the Bluestone white label product that is exclusive the NZFSG advisers of which I believe NZFSG group itself receives a margin commission payment directly for all white label product loans written.

My concern would be that are these group commission payments being disclosed the customer.

Will NZFSG advisers be disclosing to the consumer any group direct commission payments that are linked to these group exclusive “white label produces”.

I heard of an incident where a customer was told to use the second-tier lenders white label product rather than the Mainstream bank offer they received.

I hope this was not the adviser putting commission ahead of what is in the best interest of the customer as this would be the opposite of what current regulation is trying to achieve.

valkyrie6. Your comment around commission swaying an Adviser shows a lack of knowledge. Non bank lenders pay LESS than a bank in the main.

All commissions should be disclosed though and any over-rides etc need to be included.

I'd also say that Adviser potential clawbacks should be included is early repayment statements by all lenders as this can materially affect a borrower in their decision to refinance away.

Thanks JeffQV, I know of 5 Non bank lenders that pay higher commissions that main stream banks do, plus there is the trail component some advisers like to focus on to grow their regular incomes and the question always asked is does an adviser recommend a” white label “product over a main stream bank offer because the “white label” product pays an ongoing trail commission?

I’m 100% positive most professional advisers would not do this as they truly hold the best interests of their clients at the forefront, but a few might not if pressured from a large dealer group to use a product that the dealer group themselves benefits from financially.

Always good news for the industry whenever a new lender arrives on the scene. Hopefully Heartland have the nessecary capital required to play in the mortgage adviser space when it comes to them honouring potentially thousands of pre approvals.

On the subject of “white label” products been facilitated via the aggregators mortgage advisers working under an aggregator’s FAP licence will no doubt come under pressure to write home loans via this channel instead of competitor banks. Aggregators will clearly have an interest in seeing new home loans been placed with a lender from which they themselves will benefit financially. This industry has already witnessed instances in the past where aggregators endorsed certain insurance companies to their members based solely on how the override commissions were been paid. “White label” home loan products an example of where a conflict of interest could potentially arise with an adviser losing their ability to continue providing independent financial advice while working under somebody else’s FAP licence. The FMA will no doubt be monitoring to ensure that client’s financial interests are been placed ahead of the aggregator’s when the adviser endorses the “white label” option.

In these transactions the adviser will of course need to disclose to the client that their aggregator is also receiving commission from the lender supplying them with the finance. In this respect it’s no different to when an aggregator receives an override payment from an insurer off a new insurance policy. This despite the aggregator not having been part of the advice process. Full disclosure now applies on all commission been paid by the providers.