Finality for FirstLine Points Holders

firstline

Mortgage brokers waiting to hear the fate of their FirstLine points accounts will now have an answer. CIBC, FirstLine’s parent, is reportedly paying them out.

Brokers who hold FirstLine basisPOINTS will get to choose from two options:

  1. Cash payment of five cents per basisPOINT (regardless of broker status level), or
  2. Two Aeroplan miles per basisPOINT.

Separately, CIBC will allow brokers until December 1, 2012, to use their POINTS incentives (POINTS are different than basisPOINTS). FirstLine POINTS can be redeemed at firstlinepoints.com. After December 1, all remaining POINTS will be cancelled.

Paying brokers for their basisPOINTS could end up costing CIBC into the seven figures. But it’s good karma and it shows class on the bank’s part—especially since FirstLine incentives don’t have cash value (i.e., CIBC technically doesn’t have to pay brokers anything).

An official announcement is due out today.


Prior related story: FirstLine Points Still Up in the Air


Rob McLister, CMT

  1. I really don’t think that CIBC had much choice only to do this. As a matter of fact, they should be paying the full value of basis points at 8 cents. They would have held the value of Basis Points on their balance sheet as a liability of the full value, they are getting away with paying 62.5% of the true value.
    You can do up to 7% cash back on your own personal or family member mortgage, with no tax consequences and get full value.
    While this offer is welcomed by many, it is certainly not overly generous.

  2. @Kevin – Why would CIBC need to hold Basis Points as a liability? They have no contractual obligation to honour them.

  3. Upon preparation of their year end financial statements, including their balance sheet, the total value of these Basis Points, would have to be shown as a liability because they could be redeemed to pay down mortgage rates or cash backs etc and FL is responsible to pay them.
    It is basic accounting principles or assets and liabilities.
    My point it that if they showed them as a liability of 8 cents each, then they should be paying them out at the same value.
    CIBC can argue anyway that they wish, but they do have cash value for 8 cents.

  4. Gosh. Thanks FirstLine for that “goodwill.”
    I also like all the “goodwill” you’ve shown over the last year by keeping your rates a half point above the competition.
    All this “goodwill” is making me so warm and fuzzy I may just have to close my CIBC account.

  5. Kevin,
    After July 31 you won’t be able to redeem basisPoints. Once CIBC pays out brokers it will no longer need to classify them as a liability.

  6. Dear Mortgage Brokers… A friendly reminder from CRA… You had better claim the cash equivalent value of your points on your 2012 tax returns. Your friendly auditors at CRA are watching out for these types of employment-related benefits.

  7. My reference to balance sheet has strictly to deal with the value. If they held these Basis Points on their Balance sheet at 8 cents, that becomes the established value, confirmed by their liability figure.
    My second point is only that if they set the value at 8 cents confirmed by the balance sheet liability, why are we being offer 5 cents?
    It has nothing to do with accounting procedures, it has strictly to do with being worth a higher value on their books and being paid out at a lesser value.

  8. CIBC made a business decision to close Firstline.
    While I think that business decision was shortsighted and misguided; I know if I ran that business I would have given serious thought to NOT paying something that was NOT contractually owed to people I have expressed the desire to NEVER do business with again: namely mortgage brokers.
    To that extent I am simply grateful to receive compensation for the Basis points.

  9. anyone who thought the banks would continue to let independent sales people dictate their business should wake up. Good move on CIBC’s part. I have always considered them an excellent choice for banking needs, including mortgages. Firstline “was” a “class act”.

  10. Just a quick note from an observer – cash seems to make more sense for the affected brokers than Aeroplan points. You *can* get in excess of 3-4c/Aeroplan point in value if you redeem them for business class flight awards, but availability is extremely highly restricted, and this equivalence only holds true if you would otherwise be willing to pay for business class airfare. For most mere mortals, the most valuable way to redeem is for economy class airfare, which also has restricted availability, and due to devaluations and fees typically works out to about 1.5-2c/Aeroplan mile in value. The remaining option is merchandise, but hard to get more than 1c/mile this route. Therefore, unless you really know what you’re doing, would have a hard time valuing Aeroplan miles at more than 2c each.

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