by Susan Edmunds
Paul Goldsmith announced the approval of phase two of the regulations, which come into effect on December 1.
“The approval of these regulations represents the last major step in the once-in-a-generation reform of our financial markets,” Goldsmith said.
The phase two regulations cover the governance of financial products, licensing requirements for financial service providers and conduct obligations for discretionary investment management services.
The Financial Advisers (Personalised DIMS) Regulations 2014 was also issued yesterday, prescribing eligibility criteria for a person to be authorised as an AFA in respect to personalised FIMS, matters to be contained in client agreements governing personalised DIMS for retail clients and further information AFAs are required to make available to retail clients who receive a DIMS from them.
Jeremy Muir, a partner at law firm Minter Ellison Rudd Watts, said there were few surprises in the regulations and most things had been well flagged.
“The regulations do, however, contain a lot of important information for advisers who want to become licensed to provide a class discretionary investment management service (DIMS), from conditions on licensees, through the content of disclosure and client agreements, to reporting obligations where mandates are breached. The extension of the transitional period to apply for a licence for existing DIMS providers into 2015 is here too.”
The regulations confirm an exemption from DIMS licensing requirements for trustee corporations providing financial services relating to wills and estate management, statutory officers, Crown organisations and the Reserve Bank, services relating to category two products provided by a non-profit organisation offering budgeting assistance and a service provided by a person appointed by the court.
There is also an exemption for temporary management of a portfolio in situations of a client’s absence or incapacity.
Muir said: “Advisers who want to rely on these will, however, need to be across the details to ensure they meet the tests.”
For those dealing with private offers of financial products, the regulations also confirm the extension until June 1 of the ability to rely on the old exemptions under the Securities Act to make an offer without a prospectus in certain circumstances. This right exists in parallel with the ability to rely on the new exempted categories under the new law for that period.
“With the new regulations now in place, the building blocks are there to start seeing the new regime take shape after the key date of December 1, 2014,” Muir said.
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