[Updated] Fund managers on home straight of licencing race

The deadline for fund managers to become licensed is just four days away now, and so far 66 firms have become managed investment schemes.  [Includes list of licenced schemes]

Monday, November 28th 2016, 6:45AM 3 Comments

Good 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

Tags: Financial Markets Conduct Act

« FAA licensing process will be bigger job thn FMCA: MasonLVR restrictions to be reviewed »

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Comments from our readers

On 29 November 2016 at 12:16 pm gavin austin adviser business compliance said:
I have seen some of the PDS documents for some of those on the list and was quite surprised some of them got through at all.

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.
On 1 December 2016 at 9:18 am John Milner said:
Gavin, I too have looked at a new PDS and what is apparently the new "approved format". Where in the past fees were broken down i.e. Trustee, Registry, etc. This has now been replaced with one fee covering all parties involved. How does that provide transparency for clients?
On 1 December 2016 at 1:15 pm Brent Sheather said:
The FMA have said before that, when assessing financial advisors performance, it will look at outcomes rather than whether people have just ticked the boxes. My view of the FMCA is that the regulators hands have been tied by the investment bankers at the MBIE, in Government and on the FMA board. As a result the new rules just tick the boxes and the outcomes for retail investors are largely unchanged. To name a few areas which are yet to be addressed: proper disclosure, high fees, unfair performance fees etc etc etc. My view is that the industry will be well pleased with the Financial Markets Conduct Act. For some comparison on the performance of the FMA look at what the FCA is doing, post Brexit. At last a regulator that is putting clients’ interests first.


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