by Eric Frykberg
It involves NZFSG's 900 residential mortgage advisers having access to Heartland's home loans under a new scheme.
The product will be supplied under Heartland's ‘Engage Home Loans’ white label brand.
Heartland chief executive Chris Flood said the scheme would enlarge its existing online mortgage product.
“We want to expand that and offer it to brokers on the basis that they would be working on behalf of the client.
“From Heartland's perspective, the only difference is that the broker would be completing the information, not the borrower.”
Flood said the scheme had the advantage of offering borrowers a lower interest rate. It would be lower still if borrowers did the on-line work themselves, but it would still be cheaper than other loans even if it involved broker input.
Flood declined to put a figure on the difference.
The scheme was originally due to come into force last year but was delayed “due to the noise around the CCCFA”.
But Flood said it was available now even though some advisers were still being trained up to do the work.
The “white label” format was an advantage for brokers.
“We won't be branding the loans 'Heartland'. The brokers will be using their names so it is their product.”
NZFSG chief executive Brendon Smith, said the scheme would give more choices to customers.
“My understanding is that it is not exclusive, but it is a first for the group, we are bringing it first to the market, first to customers, and we will see where it goes.
“But it gives more choice, so we think it is a good thing for Kiwis.”
Heartland recently posted an 8% rise in its interim profit to $47.5 million.
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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.