3 Comments 3 CommentsGood Returns is aware of two fund managers which aren’t going to be licensed retail funds.
One is Socrates Funds Management which is run by financial adviser Charles Drace. The company says on its website “Socrates' 21st Century Unit Trusts are closing on 26 November, 2016”
Good Returns has been unable to contact Drace.
Also King Tide Asset Management is currently closed. Its website says: “King Tide Fund is temporarily closed to any new investment, including from any existing investors.”
It is understood King Tide, which runs a long short , Australasian equities fund will transition to being a wholesale fund, rather than a retail fund. The main reason for this move is around the the costs of compliance relative to the size of the fund.
The deadline for licensing of providers under the Financial Markets Conduct Act (FMCA), including managed investments schemes, DIMS providers and derivatives issuers, is this Thursday.
At the end of last week, there had been 66 managed investment schemes, 53 DIMS providers, 22 derivatives issuers and 31 independent trustees licensed.
FMA director of regulation Liam Mason said the FMA was happy with how the FMCA process had gone.
He was confident that everyone who was operating in the market and wanted a license to continue to do so after December 1 would have one issued in time.
Earlier in the year, the FMA had warned that applications needed to be in by the end of August if applicants were to be sure of meeting the December 1 deadline.
“There was a really good reaction to that from firms, the vast majority were in in time.”
Mason said it was possible there were still some operators who did not realise their obligations under the FMCA. After December 1, the FMA would do surveillance of the market to identify them.
But he said providers such as managed investment schemes were operating under the Securities Act and already needed a supervisor so the FMA was able to identify who they were and help them through their obligations.
As a result of the licensing, consumers could have more confidence that their providers were having to meet minimum standards they had not been expected to in the past.
Managed Investment Schemes registered as at Nov 26
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But then with licencing there can be an approach along the lines of "They will get a License it's just a matter of how we can find a way to get it through".
This was one of the "themes" expounded during QFE licensing leading up to the then deadline 31 March 2011 and we all know now what repercussions came from QFEs in relation to sales practices.
Lets hope the FMA regulatory oversight and monitoring of these licenses is more robust. There might be disclosure but will Joe public be better informed or more confused. Some of what I have seen will result in the latter.
FMA may make an example of some small market participant meanwhile the big end of town carries on very nicely thanks. If poor ole Joe public have to x reference the PDS with 2 or in some case 3 other documents what chance have they of being better informed, less confused or more confident so called aims of the FMC Act.