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Concerns over NZFSG-Kepa deal

Advisers have expressed concerns that a combined NZFSG-Kepa group would exert too much control over the New Zealand adviser market. 

Monday, October 12th 2020, 9:50AM 3 Comments

NZFSG and Kepa announced their merger this month, a transaction which will create a national dealer business with more than 1,600 members, settling $17 billion of mortgages and issuing $30 million of life insurance premiums. 

As the dust settles from the group's announcement, advisers have privately expressed concerns that the deal will reduce competition in the adviser space. 

Advisers have contacted TMM Online over fears that the combined NZFSG-Kepa organisation will have too big a share of the market, and are concerned that there will be reduced choice for mortgage brokers as sector consolidation continues. 

Brokers fear the dwindling choice in dealer groups may lead to increased costs for adviser businesses. 

"NZFSG already had a massive share of the market, so I'd be amazed if this wasn't being looked at by the regulators," one adviser said.

It remains unclear how much market share the combined group will control if the merger goes through. 

The takeover deal is subject to Overseas Investment Office and New Zealand Commerce Commission approval. The two companies expect the deal to be settled by October 30. 

TMM Online asked the Commerce Commission whether the deal had already been given the green light. 

"We have not received an application for clearance but we are aware of the transaction," the Commission said on Thursday. 

TMM Online asked NZFSG whether it expects to receive regulatory approval by the end of the month, but the firm did not respond to a request for comment. 

The competition concerns come as larger groups headquartered overseas, such as Astute Financial Management, consolidate the NZ broker market.

Further consolidation is expected due to rising demands under the new financial advisers' regulatory regime. 

Tags: Kepa NZFSG

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Comments from our readers

On 13 October 2020 at 7:34 am Noel Bowl said:
One man's thoughts- opinions:

What these advisers that are "privately expressing" their concerns- they should come out of the shadows and be counted. There is a reason why advisers (myself and my business associate) gravitated across to Kepa and or the NZFSG aka the "G" and that had a lot to do with their respective service propositions. Their combo commitment to the new and improved financial services regime- to advisers continuing education- compliance and to effective governance management. If FMA and or one of the other regulatators e.g. the commerce commission had a look at Kepa and or the "G" I would place money on the table they would both score close to 100%- how would the others do??? Plus, Kepa and the "G" they do not set about screwing over their advisers network- in some cases the others deduct upwards to 35% of the upfront commission (for what) +++ adding on to that the costs of a CRM.

Me and my associate are proud members of the "G" - my view is that those that chose to criticise they should come forward (public) and or stay they should stay beneath their little rocks- hmmmmmmmmmmmmmmmmmmmmmmmmmm.

Noel Bowl
On 13 October 2020 at 12:47 pm valkyrie6 said:
I hope Noel Bowl is disclosing to his customers that an Australian real estate company in now in receipt of their personal and financial information….

On 14 October 2020 at 8:33 am Amused said:
Noel - I would imagine that some of the concern from advisers about this merger relates to NZFSG having an overseas owner and that owner been an Australian real estate company. This real estate company also happens to operate a mortgage brokering arm (Loan Market) which is in direct competition to NZFSG’s own members. How comfortable are we as an industry letting an Australian owned real estate company have a significant market share of all house listing here plus also potentially become involved in organising the finance on these sales? The potential for a conflict of interest occurring between the real estate company's land agents and mortgage brokering arm is very great.

Although some New Zealand consumers might prefer the idea of a one-stop-shop service where they can approach an in-house mortgage broker via a real estate company many others prefer keeping their mortgage choices and real estate shopping separate. This is to ensure they are being given the right advice with the best possible intentions. The Commerce Commission and Overseas Investment Office will need to be completely satisfied that New Zealand consumers best interests are been fully safeguarded for this merger to be approved.

And of course we have the privacy and disclosures concerns associated with an overseas company owning a New Zealand dealer group/aggregator. Are all NZFSG members currently telling their customers that their personal and financial information is now been held by Ray White Real Estate when using NZFSG's cloud based CRM? A casual glance of some adviser’s disclosures statements online show that they are in breach of their existing legal requirements under the Privacy Act to make customers aware of ALL third parties who hold their information.

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AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 3.05 2.99 2.99
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - First Home Special - 2.25 - -
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.15 3.29 3.39
Westpac - Offset 4.59 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 2.55 2.69 2.79
Median 4.55 2.93 2.99 2.80

Last updated: 21 October 2020 8:48am

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