Comm Bank gets green light to buy Count Financial

THE Commonwealth Bank has been given the green light to forge ahead with its $373 million acquisition of Count Financial, one of the biggest networks of financial planners, after the competition watchdog found the move would be unlikely to "substantially" reduce competition.

By InvestSMART · 18 Nov 2011

By InvestSMART ·
18 Nov 2011

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The Australian Competition and Consumer Commission cleared the way yesterday for Commonwealth to become the first bank to take advantage of reforms - still being steered by the Assistant Treasurer, Bill Shorten - which aim to remove conflicts in the industry and make financial advice more transparent.

There are concerns the reforms will lead to a slew of mergers among small-end players in the financial advice industry.

The bank is now free to take control of Count's near 18 per cent stake in Mortgage Choice, the country's largest finance broking network, and its near 8 per cent stake in advisory firm DKN Holdings. The acquisition has been endorsed by Count's board.

It is the first major deal by a bank since NAB was barred from making a $13.3 billion move on wealth manager AXA Asia-Pacific.

The head of wealth management at Commonwealth Bank, Annabel Spring, said in a statement the bank intended to run the planning network on a "stand-alone basis".

Rod Sims, the new chairman of the ACCC, said the deal would increase Commonwealth Bank's presence in the financial planning and mortgage referral markets, but he was confident it would "continue to be constrained by a number of other significant financial planning dealer groups, mortgage broking firms and investment product suppliers". He found the takeover would not raise "significant competition concerns" in life insurance or superannuation. It is expected the deal will boost the bank's adviser numbers from 1220 to more than 1850.

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Frequently Asked Questions about this Article…

Has Commonwealth Bank been approved to buy Count Financial?

Yes. The Australian Competition and Consumer Commission (ACCC) cleared Commonwealth Bank’s $373 million acquisition of Count Financial, finding the deal was unlikely to “substantially” reduce competition and allowing the bank to proceed.

What does Commonwealth Bank gain by buying Count Financial?

The bank will take control of Count’s near 18% stake in Mortgage Choice (a large mortgage broking network) and its near 8% stake in advisory firm DKN Holdings. The deal is expected to lift Commonwealth Bank’s adviser numbers from about 1,220 to more than 1,850.

Why did the ACCC approve the takeover of Count Financial?

ACCC chairman Rod Sims said that although the acquisition increases Commonwealth Bank’s presence in financial planning and mortgage referral markets, the bank will still be constrained by other significant planning dealer groups, mortgage broking firms and investment product suppliers. The ACCC did not find significant competition concerns in life insurance or superannuation.

Will the takeover of Count Financial reduce competition in financial advice or mortgage broking?

According to the ACCC, the takeover is unlikely to substantially reduce competition. However, the article notes broader industry concerns that recent reforms could trigger a wave of mergers among smaller financial-advice players.

How will Count Financial be run after the acquisition?

Commonwealth Bank’s head of wealth management, Annabel Spring, said the bank intends to operate Count’s planning network on a “stand-alone basis.” The acquisition has also been endorsed by Count’s board.

What regulatory reforms made this bank takeover possible and who is steering them?

The takeover comes after reforms designed to remove conflicts of interest and make financial advice more transparent. Those reforms are being steered by Assistant Treasurer Bill Shorten and have allowed banks to pursue such deals.

How does this deal compare to past bank attempts to buy wealth managers?

This is the first major bank deal since NAB was barred from a $13.3 billion attempt to buy wealth manager AXA Asia‑Pacific, making the Commonwealth Bank–Count Financial move a notable first under the new advice reforms.

What might this acquisition mean for everyday investors and financial-advice customers?

For everyday investors it could mean more advisers operating under the Commonwealth Bank umbrella and potentially easier access to advice within the bank’s ecosystem. The reforms behind the deal aim for clearer, less conflicted advice, but the article also flags concerns that industry consolidation could follow for smaller advice firms.