DIMS rules set bar for whole industry

Expectations on DIMS providers are tipped to be an indication of how the Financial Markets Authority wants all investments managed.

Friday, November 13th 2015, 6:00AM

by Susan Edmunds

Stephen Jonas, head of client services at Craigs Investment Partners, said applying for the firm's discretionary investment management services (DIMS) licence had been a significant chunk of work and required a number of changes.

To get up to the standard required, Craigs had had to alter its processes to ensure proper separation and effective governance of its related-party custodian arrangements and update its reporting to customers, including things such as total expense ratios and bar graphs of returns by time period.

Jonas said the DIMS rules set a high bar but that was not a bad thing for the industry.

“I think for the protection and betterment of the market these are not bad things to have regulations for.”

He said the changes had meant additional costs for the business but they were a one-off and the rules made it easier for consumers to compare providers.

Clients had not yet commented on the difference but advisers had, Jonas said.

“They feel there is more prescription around it and feel there is a heavier workload but in reality there is not. The FMA is taking the opportunity to codify its expectations of code standards six and eight in the AFA rules.”

Jonas said while the changes related to DIMS now, it could be taken as an indication of how the FMA expected all investment portfolios to be managed and clients to be dealt with,.

”They should take it on board across their portfolios not just for DIMS clients," he said.

“Advisers feel things have changed but really things are the same as before with a bit of extra reporting and narrative to clients. If the FMA has said this is how DIMS should be managed, you can read that’s how they think portfolios should be managed irrespective of the style.”

He said Craigs was taking the lessons from the DIMS licensing experience on board and would modify all its client reporting over time.

Craigs applied for its DIMS licence in May and was approved on October 31.

Tags: Craigs Investment Partners DIMS