Brett Halliwell: Shifting the goalposts

Advantedge’s general manager has long predicted a breakthrough for white label, but a rapidly changing market presents new challenges, he tells MPA editor Sam Richardson

If white label lending becomes the norm in Australia, it’ll have Brett Halliwell to thank. While Advantedge is certainly not the only lender in Australia to fund white label mortgages, Halliwell has been promoting these products incessantly since joining the NAB-owned lender in 2009.

Halliwell is finally getting to the point of ‘I told you so’. From humble beginnings white label now accounts for 7% of overall lending, according to MFAA Comparator data – its share having doubled over the last two years. AFG’s quarterly Competition Index puts white label’s share ahead of that of many non-major banks. Halliwell has reasons for optimism: “[White label] is fairly understood: it is gaining good traction, and most brokers in the market do have a fairly good feel of what it’s about.”

Yet the market Halliwell seeks to dominate has also changed. Whether through APRA’s changes to investor and interest-only lending or ASIC’s proposals on mortgage broker remuneration, Advantedge has been forced to alter its strategy. Furthermore, being owned by NAB, Advantedge stands at the eye of the storm following the publication of the Sedgwick review. Halliwell talked to MPA about the challenges and opportunities on the horizon.

Regulation and response
“The market landscape now is a lot more complicated,” Halliwell explains. “Most lenders will have differences between investors and owner-occupied, P&I and interest-only. What the market and us have done is move to a matrix-based price structure, and that includes LVRs.”

As part of the matrix-based approach, Advantedge raised variable interest rates in January and April, the former affecting all borrowers and the latter restricted to investors. However, in February Advantedge actually reduced fixed and variable rates, in conjunction with the removal of its Quality Discount Program.

Halliwell recognises the confusion such shifts can cause. “With the market making many changes to pricing and many changes to policy, it’s difficult and confusing for brokers to keep up with a lot of these changes,” he says. “Advantedge has been on the front foot with BDM support and operational support to walk brokers through these changes to make sure they’re fully up to date with where we’re placed in the market at any given time.”

Policies were simplified in May and will be further simplified in the coming weeks, says Halliwell. “They go to areas like income verification, further changes to our valuation policy, and our definition of self-employment.”

What hasn’t changed is Advantedge’s ‘two-pronged’ strategy and target borrower. The lender is well known for mainstream mum-and-dad products but, Halliwell explains, “at the other end of the spectrum we’ve worked hard at being able to do bigger and more complex deals, and I define bigger as being loan sizes over $2m, and complex is self-employed business owners who might have, for example, complex trust structures.”

Taking the initiative with technology
While many lenders are being forced to go on the defensive, reacting to one regulatory upheaval or another, Halliwell insists that Advantedge is proactively improving its offering to brokers, particularly when it comes to technology.

In March, Advantedge launched an SMS service to allow customers to pick a valuation appointment themselves. “The convenience of being able to organise it is a real value-add for the purchaser,” says Halliwell, pointing out the difficulty of coordinating buyers, owners and tenants. That’s in addition to the kerbside and electronic ‘desktop’ valuation options available.

“The world is very much moving towards digitisation and how we make things easier through digitisation of everything we do,” Halliwell observes. Advantedge is playing its part in this, running pilots on electronic customer identification, electronic documents and electronic settlements.

One project, in which brokers use mobile phones to identify customers, demonstrates the spin-off benefits of technology, according to Halliwell. “It’s convenient for the broker, it’s convenient for the customers, but as a lender it also offers the benefits of ensuring that deals are lodged with things like privacy declarations and broker consents. That means there’s a better chance of us getting it right first time, which allows us to deliver a better and faster experience back to the broker and their customers.” ASIC and Sedgwick

The ASIC Review of Mortgage Broker Remuneration examined both Advantedge and white label, but neither were mentioned in ASIC’s six proposals. Nevertheless, Advantedge will be directly affected by Proposal 4, for “clearer disclosure of ownership structures within the home loan market”.

“During the course of the consultation period we will certainly be looking at [ASIC’s proposals] from those different perspectives,” says Halliwell. “I understand that PLAN, Choice and FAST are looking to provide additional disclosures to customers, through the likes of credit guides, which will actually mention the NAB ownership and call out that Advantedge is a white label under that aggregator and is owned by NAB.”

Nor did ASIC entirely overlook white label, Halliwell observes. “Lenders who own aggregators had broadly the same market share across all aggregators, including those that were now owned; but where they have a white label, in addition to the primary brand, they capture an additional market share,” he says. “I don’t think ASIC reflected on whether that was a positive or negative outcome; certainly from our perspective we very much take the view that brokers act very much in the interests of customers.”

Advantedge will be adopting relevant changes “consistent with the themes and findings of the ASIC report”, while making a submission, Halliwell explains. “Broadly our position is that we support the findings and proposals that were made by the regulator.”

Advantedge will also need to respond to the Sedgwick review. Sedgwick recommended that banks decouple commission from loan size by 2020, and NAB has committed to implementing the recommendations. Will Advantedge also be ending percentage-based commission? “We are reviewing our position,” Halliwell says. “Advantedge, as a part of NAB, will be encompassed by the lender’s response.”

For now, Halliwell is determined to keep pushing white label, confident it will succeed. “All of us go to supermarkets, and if we can embrace white label in supermarkets, it’s a really easy extension to take that into a bigger and more important purchase like mortgages.”