Mint, which has about $160 million under management, has recently had two if its funds added to RaboDirect's online offering.

And Thomas said tightened regulation had tipped the scales for many banks considering whether to sell their own in-house product exclusively or outsource to specialist fund managers.

“Banks are looking to avoid a repeat of the product selling scandals which revealed the practice of reputable banks selling their own in house products to their client, products which often did not stack up in terms of performance or product design against more independent, specialist fund managers.”

“One of the biggest issues at the time was that Mum and Dad investors did not understand that banks were regularly selling their own in house products, often under different brand names,” Thomas says.

“Today under the Financial Advisers Act, and as a QFE, banks are faced with a legal obligation to disclose information about its services, including if they are offering a tied or in-house product.”

Thomas said New Zealand is likely to follow the overseas trend where a “better-than-best” presumption is imposed within banks.

This means if a bank adviser decides to sell an in-house rather than recommend an outsourced product the adviser needs to be able to demonstrate, based on independent evidence, that the in-house product is among the best available in its peer group.

An additional advantage for banks is a reduced compliance burden which can be very overbearing in highly regulated markets.

“In a regulatory sense, the banks are responsible for advice on products but depending on how they structure the offering, the features and benefits of the product is the responsibility of the third party fund manager,” Thomas said.