The nation's biggest broker group, NZFSG has effectively completed a takeover deal. Kepa's mortgage business will become part of its larger rival, marking the latest phase in industry consolidation.
The two groups have been in talks for several months, TMM Online understands.
Kepa’s members will be integrated within the NZFSG-Loan Market dealer network. Kepa advisers will be given the option to move onto NZFSG's MyCRM system, while Kepa’s staff will transfer to the merged business.
Kepa’s general insurance arm will remain with Kepa’s holding company, Kepa Financial Services. The assets are expected to be divested, and KFS eventually wound down.
The deal is subject to regulatory approval. The Overseas Investment Office and New Zealand Commerce Commission need to give the deal the green light, but the two groups expect settlement by October 30.
Both parties believe the additional scale will help under the new financial advisers' regulatory regime, which will place greater demands on groups acting as Financial Advice Providers for their members.
In a statement, the two groups said the deal would create a national dealer business with more than 1,600 members, settling more than $17 billion of mortgages and issuing $30 million of life insurance premiums each year.
NZFSG chief executive Brendon Smith said: “With the industry facing complex and sweeping regulatory changes, including the delayed introduction of the Financial Services Legislation Amendment Act (FSLAA) and the pending Financial Markets (Conduct of Institutions) Amendment Bill, New Zealand’s independent financial advisors are facing an increasing compliance burden.
“By combining our respective businesses and expertise we can support advisers to navigate these changes with the added benefits of genuine scale."
The merger comes as other groups, including Astute Financial, attempt to consolidate, striking deals with Mortgage Express and The Mortgage Supply Company over the past two years.
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How does the FMA feel about 1600 advisers operating under one Australian owned dealer group FAP license?
How could such a large group be responsible under one FAP license for the advice given by 1600 advisers? the adviser is the one giving the advice to the consumer.
Does a large group of this size now think it can charge advisers whatever it’s wants regarding “compliance fees “admin fees “membership fees” commission share fees “fees in general?
This Group mentioned that via this take over they will have larger bargaining power with product suppliers, are they referring to what deals they can negotiate for themselves regarding referral fees/ override commissions for the group ,or are they referring to what they can negotiate for the advisers /members /customers ?
Are advisers in New Zealand now lacking in choice when it comes to a dealer group and forced into using an overseas group/systems based offshore?
Why is it still compulsory from banks for advisers to be under a dealer group when the whole concept behind the new regulation is to improve the financial advise industry and once advisers under their own FAP license are fully up and running will be in the best shape the industry has even been in.
Is this now a monopoly by overseas investors in the New Zealand dealer group market, how does the Overseas Investment Office and NZ Commerce Commission view this?
How do current Kepa advisers feel about being under a dealer group that competes directly against them under their own Loan market brand?
Does this have an influence on the New Zealand consumer having such a large Australia owned dealer group and the big four banks being Australian owned.?