New regulations to help DIMS industry

Commerce Minister Craig Foss today announced changes to the regulation of discretionary investment management services (DIMS) to ensure investors are well protected and the regulatory regime works for smaller players.

DIMS include any service where the provider decides which financial products to buy or sell on behalf of their client, without having to get their client’s agreement to the transaction.

“The introduction of a strong regulatory regime is part of the Government’s Business Growth Agenda and aims to promote confident and informed participation in New Zealand’s financial markets,” Mr Foss says.

“These changes will reduce the risks to investors by ensuring they are able to make decisions based on sound information.

“They will also make DIMS licensing more accessible for smaller providers, such as many financial adviser businesses. The base fee for a DIMS licence will decrease by 40 per cent from $3565 to $2139. 

“It’s very important that all participants in this sector are able to realise the opportunities provided by the passing of the Financial Markets Conduct Act,” Mr Foss says.

The Financial Markets Authority is releasing a guide on the application process to help smaller financial adviser businesses with the licensing process.

Other key regulatory changes include:

• Alignment of the requirements for DIMS under the Financial Advisers Act 2008 with those that will apply to other DIMS providers under the Financial Markets Conduct Act 2013.
• An exemption for financial advisers who only manage their clients’ investments in limited situations, such as when they are on holiday.

• A transition period for existing DIMS providers, allowing them until 1 June 2015 to apply for a licence and until 1 December 2015 to update their client documentation. New providers will need to comply from 1 December 2014.

The Cabinet paper and regulatory impact statement can be found at: http://www.med.govt.nz/business/business-law/current-business-law-work/dims-and-custody