Small-to-medium discretionary investment management service (DIMS) providers could be granted a reprieve under new threshold levels proposed by the financial regulator.
The new proposals, sent out to the market last week by the Financial Markets Authority (FMA), substantially lift the retail funds under management cut-off levels across all three tiers of the mooted DIMS regulatory regime for small-to-midsized players.
Originally, small-to-medium DIMS licensees would have been subject to differential regulatory requirements based on FUM levels of less than $5 million, between $5-10 million, and between $10-20 million. The revised thresholds have been raised to under $20 million, between $20-50 million, and $50-100 million respectively.
While most of the reporting obligations for each of the three DIMS levels remains unchanged, the new FMA proposals include a few amendments.
For example, level 3 DIMS providers (with between $50-100 million in retail FUM) have the option of using a certified practising accountant as well as the chartered variety to “review” financial statements. In the original draft DIMS reporting exemptions, level 3 provider financial statements “must be audited by a chartered accountant”.
The FMA has also added the condition for all levels of DIMS providers to use an independent custodian.
However, the regulator has opened up a small window for ‘reconsultation’ with interested parties with further feedback due at the FMA by Tuesday April 28.
The FMA said in an email to providers last week: “We acknowledge the tight timeframe for response but note that we are aiming to be in a position to give prospective DIMS licensees certainty about what obligations they will have and to allow time for applicants to complete their license application ahead of the 31 May 2015 deadline.”
All entities including Authorised Financial Advisers (AFAs) who have offered, or disclose in their Financial Services Provider documents that they can offer, DIMS have until May 31 to comply with new regulations.
The FMA also surveyed AFAs last week to “gauge how many applications FMA is expected to receive for AFA’s intending to apply for a DIMS licence in the coming weeks”.