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DIMS exemptions welcomed

There’s relief that the Financial Markets Authority has responded to industry concerns and altered what it will consider a small DIMS provider.

Wednesday, May 6th 2015, 6:00AM

by Susan Edmunds

In March, the FMA said it was aware the cost of requiring small DIMS providers to produce audited financial statements might outweigh the benefits to clients.

It asked for feedback on a proposal to exempt small and medium-sized licensees, but said a level one provider would be a sole trader with less than $5 million FUM. Level two traders would have up to $10 million.

Advisers said that a practice with less than $5 million FUM was likely too small to bother with a DIMS licence anyway.

Yesterday, the FMA announced it had approved two categories of exemptions that would be available to DIMS providers who had up to $250 million in retail FUM and were licensed for DIMS.

Those with less than $100 million in FUM would be exempt from preparing financial statements that comply with generally accepted accounting practice and from audit and lodgement requirements.

DIMS providers are still required to keep accounting records and may be required to prepare financial statements to meet their other existing company or tax reporting obligations.

Those with up to $250 million are exempt from having financial statements audited, but still required to prepare financial statements that comply with GAAP and to lodge them with the Registrar.

“Through consultation, we carefully weighed up the benefit of having financial information about these DIMS providers available to investors, against the cost to small DIMS providers of providing this information,” said the FMA’s general counsel, Liam Mason.

“Under DIMS, the main protection for investors is that their assets are held either by themselves or by an independent custodian who is subject to audit requirements,” he said.

Adviser Murray Weatherston, former chairman of SIFA, said the association had made a submission saying that the levels were too low. “The FMA has listened to the industry and come up with a much more amenable proposal than they did at the outset. The only problem is it doesn’t seem there are going to be many DIMS licensees for it to apply to.”

In some cases, a DIMS provider may additionally undertake other activities that also make it an FMC reporting entity.  The exemptions will not apply in these cases.

Tags: DIMS FMA

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