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FMCA DIMS transition and further changes announced


FINANCIAL SERVICES REGULATION| 17 JUNE 2014

FMCA DIMS transition and further changes announced

Transitional provisions for the new requirements governing discretionary investment management services (DIMS) in the Financial Markets Conduct Act 2013 (FMCA) and the Financial Advisers Act 2008 (FAA) were announced, together with other changes, by the Commerce Minister yesterday.

Key changes

• An extended transition period for existing DIMS providers to 1 June 2015 to apply for a licence and to 1 December 2015 to update their client documentation. New providers will need to comply from 1 December 2014.

• Alignment of the requirements for DIMS under the FAA with those applying to other DIMS providers under the FMCA. An additional eligibility requirement will be introduced for AFAs who provide personalised DIMS under the FAA, to enable the FMA to assess their capability. Additional matters will be added to the existing disclosure statements of AFAs offering DIMS, and requirements for client agreements and reporting will be introduced under the FAA.

• Regulatory flexibility to ensure additional costs are not imposed on those offering limited services. For example, an exemption is to be introduced for AFAs who manage their clients' investments only for limited periods or under limited circumstances (e.g. when the client is on holiday).

• A 40% drop in the base fee for a DIMS licence - from $3,565 to $2,139. This is based on the average application taking 12 hours, recognising that many smaller DIMS providers may have more straightforward offerings. A further $178.25 per hour still applies after 15 hours of FMA time.

The Minister's statement is available here.


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