Non-aligned dealer groups have mixed views over Commonwealth Bank of Australia’s (CBA) intended acquisition of Count Financial, with one licensee calling on the Australian Competition and Consumer Commission (ACCC) to block the deal.
“Personally, we would like to see it blocked so as to retain some real independence to the marketplace rather than forcing a trend towards vertical integration,” Futuro Financial Services managing director Dennis Bashford said.
“I think a process that encourages vertical integration and discourages independent advice is bad, not just for the industry, but even more importantly bad for the consumer, and this is exactly the direction that FOFA (Future of Financial Advice) is taking things.”
Snowball managing director Tony Fenning said while he understood the transaction’s merits from a shareholder and industry perspective, it was a shame independents were being taken over.
“CBA is probably a good owner if [Count] is not going to be independent, but it’s sad that the independent part of the industry is getting pretty thin, so there is a bit of a tear in the eye about that,” Fenning said.
He said he would be surprised if the ACCC would consider blocking the transaction.
“It’s appropriate they consider it, but I don’t think it’s sufficiently large to be talking about being anti-competitive. We would expect the deal to go through,” he said.
Synchron director John Prossor said CBA’s purchase of Count would significantly reduce the number of advisers representing a non-institutional licensee, which was a bad outcome.
“It would be nice [if the deal] didn’t happen, but to an extent it’s also an inevitable consequence of market pressures and the FOFA reforms, which are making it harder to remain non-aligned,” Prossor said.
CBA last month agreed to buy Count for an equity value of around $373 million.
“While the offer from CBA was unsolicited, in light of the regulatory uncertainty and our goal to see Count continue to prosper as a champion of accountant-based advisers, the directors and I believed we should put this offer to shareholders for their approval,” Count chairman Barry Lambert said.
Stockbroking and advice firm Bell Potter said in a report that the acquisition appeared to be a logical move for Count’s management as it would help solve FOFA hurdles while allowing the dealer group to retain a level of independence.
Industry speculation has suggested Westpac’s wealth management business, BT Financial Group, may enter the race to buy Count, particularly as it has most of the dealer group’s $6.22 billion in funds under advice on platforms.
“We view the likelihood of a counter bid as low, although note WBC (Westpac Banking Corporation) has the most to lose longer term,” it said.
When asked if Westpac had plans to make a counter bid for Count, a company spokesperson said: “We don’t have any comment on this except to say that it is important not to get deal envy. Whether or not we make a bid, it will be our decision.”
The ACCC has called for comments on the CBA’s proposed acquisition of Count, with the last day for submissions being Monday 26 September.
