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Managers on borrowed time

There are fears many fund managers and DIMS providers may miss the mark for licensing under the Financial Markets Conduct Act, and find themselves shut out of business.

Friday, July 15th 2016, 6:00AM

by Susan Edmunds

Liam Mason

The FMA has put out a final call for those who want to be registered by December 1, when the new rules kick in.

Anyone who wants a licence in time will have to apply by August 30, or will not be able to operate after December 1. The licensing process can take up to 12 weeks.

FMA director of regulation Liam Mason said:  “When the Financial Markets Conduct Act came into effect we were very clear in setting out an appropriate implementation time so the industry could go through the licensing process and meet the standards of the new regulation. Our experience shows that businesses need to take time to work through the process so we need to engage with a few providers that haven’t started the process.

“Our licensing team talk to new applicants about the minimum standards and level of compliance they will need to continue offering financial products and services to consumers. This process is a good opportunity for the FMA to talk individually to providers about conduct obligations under the new Act.”

The FMA is currently processing 40 licence applications, is in discussion with another 12 providers but believes there may be more out there that still need to apply in order to stay in business after December 1.

Thirty-eight MIS licenses have been handed out so far with 16 still in the process, along with 51 DIMS licenses. There is one DIMS provider still working through.

Sue Brown, of DLA Piper, said it was likely that some would not get in, in time. She said while many who did not make it might be small or niche operators, there could be some surprises among larger operators, too."There might be bigger operators who take it close to the line."

Brown said the licensing process was never going to be smooth because it was a first attempt by the industry and the regulator. "There are things that we have all learnt from the process... we've all got to keep a steady nerve over the next four-and-a-half months."

She said those who wanted a licence needed to act quickly.

"FMA has made it abundantly clear it has no 'Plan B' to deal with any bottleneck of managers who leave it too late to apply for a licence in 2016."

She said it was possible to find ways around the rules - such as dealing only with wholesale investors - but they needed to be approached with caution.

Tags: Financial Markets Conduct Act funds management

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