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Big DIMS bill looming

Financial advisers who provide DIMS are bracing themselves for a big increase in their annual Financial Markets Authority levy.

Thursday, July 28th 2016, 6:00AM 1 Comment

by Susan Edmunds

The FMA is calling for significantly more funding to help it carry out its expanded regulatory role.

Under proposals issued for consultation, the bulk of funding would be provided via financial services providers’ annual levies – many of which are set to rise.

Among the changes proposed is the suggestion that advisers dealing in DIMS be put into a separate DIMS levy category.

At the moment what they pay depends on whether they operate a personalised DIMS service under the Financial Advisers Act, which costs them $304 a year, or if they are licensed to offer class DIMS through the FMCA, which costs $1739.

New tiers would be introduced that would increase those charges to between $4000 and $6500 for those with up to $100 million under management, $8000 to $13,000 for those with $100 million to $250 million and $26,000 to $38,000 a year for those with more than $250 million invested through DIMS.

The FMA would like to see the “enhanced funding case” introduced, which would result in the highest level of levy being introduced at each tier.

In the consultation paper, the FMA said some DIMS were similar to a managed investment scheme.

Managers of securities would pay between $16,000 a year and $26,000 for FUM up to $500 million under the proposed changes.

“As the FMA do not treat DIMS categories differently we propose to consolidate DIMS providers into their own levy class and tier the levy payable according to assets under management. The implication is that the cost of the levy will increase for both types of DIMS providers but more so with those regulated under the FA Act.”

Compliance consultant Gavin Austin said he was encouraging his clients to lobby hard against the proposals.

“Fees have gone through the roof.”

He said it seemed unfair that levies were set to rise significantly for smaller operators while the bigger players who would have more clients to help bear the load were relatively unscathed.  A levy of $13,000 a year was the equivalent of working for a couple of clients with $1 million to invest, for nothing.

“Do they think the average player is that thick that they’ll just wear it?”

Tags: DIMS

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Comments from our readers

On 28 July 2016 at 7:45 am MPT Heretic said:
According to the consultation paper brokers and custodians 'have a higher risk profile than most other classes'. So you would imagine they would warrant increased regulatory oversight... apparently not if the proposed levy is anything to go by. Despite dealing with thousands of investors and earning revenue on literally $billions, brokers will pay a max fee of $1900 and custodians $6500. So the poor old AFA is going to be charged more than brokers and custodians, just for having 1 client using DIMS! Not hard to see the regulatory bias here. Hardly fair and transparent!

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