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Newpark in discussions with banks on new regime

The general manager of mortgage adviser group Newpark Home Loans is confident of striking a deal with banks to operate under the new financial advisers' regime.

Thursday, August 1st 2019, 12:10PM 7 Comments

Newpark is one of a few groups that does not want members to operate under its FAP licence. Instead, it wants members to become their own FAP.

The licensing issue has caused concern with the major banks, who are said to want advisers to operate under their group's FAP. Small groups have complained this stance favours bigger players.

Andrew Scott says Newpark is “coming to an agreement” with lenders around the new regime. He says this is likely to involve building a “principles-based approach” around duty and obligation into its broker agreement, and enforcing independent audits each year.

Scott says his advisers will have to be independently-certified each year to make sure they continue to adhere to the banks' standards.

“I like that approach as it allows the advisers to manage costs. If they stick to the standards, the audit should be straightforward.”

He says Newpark will make some changes to its broker agreement to give confidence to lending partners.

“It will allow businesses to maintain independence and integrity while giving the banks a great deal of comfort,” he said.

The banks are yet to formalise their position on how they will treat individuals and businesses that take FAP status, leading to confusion among smaller players in the market.

After positive talks with two lenders, Scott said Newpark would take a FAP licence at group level “to give banks a degree of comfort”. He said this would not change the group's stance on wanting members to have their own FAP.

Tags: Lending Newpark

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Comments from our readers

On 2 August 2019 at 9:35 am Goodpeople@wealthhealth.co.nz said:
Great news that Banks are considering this approach. Well done Andrew for fighting the good fight for us little guys. Belonging to someone else's FAP is likely to increase costs significantly for our business in comparison to an annual compliance audit by approximately $40k per year (4 advisers).
On 2 August 2019 at 10:34 am Rohitr said:
Well done Andrew for leading the charge for the small guy. I for one as a self employed operator would like to be in control of my own destiny and take out my own licence whilst having the support of my aggregator when required.
On 2 August 2019 at 10:34 am Rohitr said:
Well done Andrew for leading the charge for the small guy. I for one as a self employed operator would like to be in control of my own destiny and take out my own licence whilst having the support of my aggregator when required.
On 2 August 2019 at 10:39 am valkyrie6 said:
yes this is great for smaller adviser businesses , if larger groups are the main FAP holders (as most of these are Australian owned with Australian based CRM systems ) does this not defeat the purchase of the NZ consumer getting a choice of advise. Some banks are obviously happy with the large groups holding the FAPs and all advisers falling under these as this helps with admin but really some banks need to make more of an investment into the adviser industry themselves rather than leave it to overseas owned dealer groups. Food for thought
On 2 August 2019 at 4:53 pm Amused said:
If advisers and small businesses are individually licensed (FAP status) and dealing with the banks and insurers directly whether their existing head group can still demonstrate an ongoing value proposition comes down to the service they offer members. Some head groups would have to justify why they still deserve to receive payment such as overrides.

Looking at what some of the insurers are doing already around the subject of production-linked volume-based commission payments and the current spotlight around the conduct and culture issue of incentives I would say the likelihood of override payments continuing for head groups is very uncertain.

With the above in mind advisers and small businesses electing to operate under an existing head group’s licence (FAP) could ultimately come to regret their decision. If the override commissions do indeed disappear then groups will inevitably increase their levies to members and demand an ever-increasing slice of upfront mortgage commissions. It would make no sense for an adviser to remain with their head group if they can cut out the middleman and deal directly with the banks and insurers themselves.

With many advisers now essentially tied to their head group by their dependence on that group’s cloud-based CRM to operate extricating one’s self won’t be an easy or quick process.

On 6 August 2019 at 11:34 am valkyrie6 said:
I totally agree , I think advisers need to hand on heart confirm in detail where their clients banking information is being stored / data mined in the cloud so consumers can agree or disagree to have their personal information loaded on CRM's owned by overseas companies, if advisers are not doing this already .
On 8 August 2019 at 2:24 pm Andrew Scott said:
Just some added context from me:
The Newpark group only has Adviser shareholders so we do not mandate what type of licence to apply for, or what CRM Advisers must use.

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.19 ▼4.05 ▼3.95 4.49
ANZ Special - ▼3.55 ▼3.45 3.99
ASB Bank 5.20 ▼4.05 ▼3.95 4.39
ASB Bank Special - ▼3.55 ▼3.45 3.89
BNZ - Classic - ▼3.55 ▼3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 4.15 4.09 4.39
HSBC Premier 5.24 3.35 3.35 3.35
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kiwibank 5.80 4.30 4.24 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.49 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 4.50 4.86 3.89 3.94
Lender Flt 1yr 2yr 3yr
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.65 ▼3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.49 ▼4.29 4.85
TSB Special 5.29 3.69 ▼3.49 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - ▼3.55 ▼3.45 3.99
Median 5.34 4.05 4.02 4.05

Last updated: 21 October 2019 9:16am

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