First test for white labels is client interest

by Mackenzie McCarty02 Nov 2012

Another aggregator executive has warned against brokers selling white labels based on special inducements.

National Mortgage Brokers' Gerald Foley has said aggregators need to be careful they do not offer any special benefits or inducements to their brokers to give white labels preferential treatment over other lenders.

Foley said such inducements could include preferential processing, remuneration levels or credit decisions.

Recently other aggregators including Mortgage Choice and Connective, which each have their own branded product lines distributed through their broking networks, have also been vocal in encouraging their competitors no protect the industry from aggressive white label sales tactics.

Both aggregators suggested a failure to do so could encourage intervention from ASIC in future.

Foley said that if an aggregator provides a white label option and a broker properly sells that product where it fits a client’s needs, then there should be no problem with that.

However, Foley said that in nMB's experience, brokers had been split on the ethics of selling these to clients.

"Many brokers were quick to consider and then add the nMB Direct products to their “own” panel, and there were others who felt selling their aggregator’s product could somehow be a conflict," he said.

Foley said he did not believe a white label product produced inherent conflict, with inducements aside.

Recently, Advantedge general manager of distribution Brett Halliwell defended the group's aggressive white label strategy, arguing that in providing its suite of product to FAST, PLAN and Choice brokers it was providing much-needed market competition.

He cited an enhanced service proposition for brokers and customers, as well as simplified product and documentation.

Since the laundh of the Advantedge white label range at the beginning of last year, each product has risen to become among the top four lenders on each of these aggregator panels.

Foley questioned whether such products did add competition if an aggregator is owned by a bank.

"They may bring a broader range of products to the market but we all know that all roads lead to Rome when it comes to the source of the funds for these loans," Foley said.

Gadens Lawyers Jon Denovan recently revealed to Australian Broker that the MFAA would soon be updating its 'Conflict Module', which provides legal guidance to brokers in relation to the sale of such products.

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  • by Brisbane Broker 2/11/2012 11:03:24 AM

    This is same if CBA sells CBA loans and loan writer gets wage + commissions or when banks tell you 'you need to give us a application or we will cancel your accreditation'.

    From my point of view; everyone is drumming on broker because they are easy target, why not go against CBA, WBC NAB or ANZ.

  • by Coast Broker 2/11/2012 12:59:51 PM

    Agree with Brisbane Broker. I am a Member of Plan and yes do sell Plan Lending Products however they in most cases sell themselves when the product features match the majors and offer cheaper interest rates and fees. Lets face it Plan Lending is funded by one of the Majors. Just because I get a higher commission I see it as just a bonus if the client likes what Plan Lending can offer them. If I did not offer a white label product as a comparison I would be not offering my clients the proper service they deserve.