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Newpark makes U-turn on FAP status

Newpark Financial Services board met last week and has done a U-turn and decided to become a financial advice provider.

Monday, March 23rd 2020, 6:46PM 6 Comments

Bernie McCrea

Previously the group said it would not be a FAP and encouraged its 450 members to establish their own FAPs.

The move comes following the sudden departure of its second chief executive, Melanie Purdey, and after Partners Life announced it was changing its commission model. Rather than pay overrides to dealer groups Partners is planning to pay the override to FAPs from where the advice is being given.

Payment of commission will be based on measures of good customer outcomes. Partners said the decision was made in response to regulatory pressure.

Newpark's new chairman Bernie McCrea says it's a major change in strategy.

He says if the earlier model of relying on override commission continued "the lights will get turned off".

He says other insurance companies have not followed Partners "and [they] have already indicated their support for Newpark".

With transitional licensing ending on June 28 and many of its members already becoming FAPs McCrea admits the group will be in catch-up mode.

McCrea says: "We still want advisers to become their own FAPs, and we will continue to help them do so. There is now a need to review this strategy and be flexible and look to offer a FAP to advisers sometime in the future. The flexibility of this is advisers can choose to still be in their own FAP but others will want to, over time, come together under a structure that meets the needs and objectives of advisers, regulators and our business partners."

"This is not just a revenue-based decision but acknowledges that the marketplace is always evolving and we want to remain flexible and offer concurrent models that respond to this new environment. This is where advisers will have choices where we will support them technically, operationally and financially into their future."

He says Newpark has a strong balance sheet which will help the group set a platform to launch from.

"We will be consulting advisers, our business partners and regulators for the exact format of our FAP offering and more announcements will follow in due course."

McCrea says Newpark has already started talking to all insurance companies, fund managers and mortgage companies and "they have all indicated so far that they support this decision and look forward to working with Newpark.

"We know there will be a tremendous amount of work to achieve this and more information will follow as we have it available but rest assured, we are 100% committed to advisers' success."

Tags: Bernie McCrea FAP Good Customer Outcomes Newpark Partners Life

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Comments from our readers

On 24 March 2020 at 12:43 am John Milner said:
That one made my day thank you.
On 24 March 2020 at 1:31 pm Veteran Charles said:
Good decision in my view.
On 25 March 2020 at 7:31 am Backstage said:
Full speed in all directions? Love the "already started to talk too insurance companies" ... already? If NP can make this work it will be remarkable!
On 27 March 2020 at 3:26 pm Matron said:
Hold on, I must be missing something. My understanding is the home loans side of the business already has a transitional FAP licence and the insurance side had lodged an application some time ago as well.
On 27 March 2020 at 3:41 pm The Oracle said:
Strange headline and maybe chasing a story that isn’t there as Newpark already has one license and the other I believe is in system so hardly a u-turn.
My understanding is Newpark was, and continues to promote adviser self-licensing and good on them for sticking with it, however they always were getting a license as some of the 450 members have requested coming under Newparks license to benefit from the scale and help.
This was talked about at their roadshow and all communications so no U-turn and good on them for trying to cater for all their members by giving them options. PartnersLife are clearly trying to bust all groups including big faps to gain control,... then what? Join their fap?”
On 3 April 2020 at 4:25 pm Backstage said:
The first sentence reads that previously the group said.... so the headline if incorrect should be followed up with either Phillip or the "Directors" of NP to see who made the original statement. Not quite sure why the thought is Partners would break up any group or significant adviser practice that is providing real value and direction and genuinely providing support to advisers to provide a better client outcome. "My understanding" is, the statement that the article starts with.. was very true!

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