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.
