by Susan Edmunds
The FMA has released further information aimed at helping advisers to understand how DIMS will be regulated under the FMC.
If advisers have authority to make decisions on behalf of their clients, they will fall under the DIMS rules – whether the client has the ability to countermand a decision or not.
The FMA expects the majority of DIMS to be class, and require licenses. And it doesn’t expect many AFAs to qualify to offer personalised services.
The Ministry of Business, Innovation and Employment is taking submissions on whether there should be exemptions from the DIMS rules for some advisers.
Adviser Alan Clarke has already made a submission calling for those who use a wrap platform to be exempt.
“I am a small adviser using the Aegis secure platform. It is impossible to build a Ponzi scheme or steal clients’ money via Aegis. For clients to sign off each and every transaction would mean 500 to 1000 extra letters per annum. It’s highly inefficient and a return to the dark ages of snail mail and paperwork.”
He said the exemption could provide wrap-using advisers with a limited authority to rebalance a portfolio by small amounts. “If this was a permanent DIMS licence exemption, it would be workable and minimise extra administration.”
But adviser Murray Weatherston said even with an exemption, advisers could find themselves subject to very stringent monitoring because the FMA might be concerned about people trying to duck the rules.
“I’d be wondering whether it’s worth it. I fear for the small adviser end of the market. I don’t think many small-end advisers are going to be able to muster the resources to react to the compliance requirements for a DIMS.”
DIMS providers will have to meet new rules such as the requirement to set target ranges for clients and telling the FMA if these have been breached.
Weatherston said while that would not be hard for a large organisation, it would be a lot of work for a one-man operation.
MBIE will accept submissions until April 8.
DIMS
NOT DIMS
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In terms of a return to the dark ages, I calculate that for all clients to sign off all transactions - 500 to 1,000 letters pa - would add 50 days pa to my work load
Can't say that excites me