First DIMS licence granted
Applying for a discretionary investment management services (DIMS) licence was an opportunity to step back and review the business, GMI head of wealth products Joe Bishop says.
Wednesday, January 14th 2015, 6:00AM
by Susan Edmunds
GMI is the first investment manager to be granted a class DIMS licence under the Financial Markets Conduct Act, for its Private Portfolios service, through which investment advisers manage portfolios on clients' behalf. Because they make buy and sell decisions without asking the client's input each time, this counts as class DIMS under the Financial Markets Conduct Act.
The licence will allow the Private Portfolios service to continue to operate in this manner once it takes effect at the end of March.
GMI also offers KiwiSaver and a superannuation scheme. Bishop said GMI prioritised the DIMS application but is also working on the licensing process for a Managed Investment Scheme licence.
Bishop said the new DIMS licensing arrangements would deliver better protection to investors by imposing more obligations and minimum standards on providers.
“GMI has always been vocal about championing our investors’ best interests, including the need for greater protection for investors and higher standards for professionals and service providers. The new DIMS licensing regime, as part of the Financial Markets Conduct Act which came into full effect a few weeks ago, is a major stride towards securing this across the finance industry.”
He said GMI wanted to see strong governance, clear communication and transparent reporting and processes improve across the industry.
“It was a question of when not if we would be going for a DIMS licence. We’re delighted to be the first to be granted a licence. We saw the FMCA as a huge step forward… we’re delighted to be at the forefront. We strongly believe in the objective of licensing.”
GMI had recognised the licensing process as an opportunity to step back and review the business, he said, and had worked collaboratively with the Financial Markets Authority over a process that took about 12 months.
“We believe it is beneficial for us as a business and our investors.”
FMCA requirements to keep custody services independent from DIMS services have proved a hurdle to some providers but Bishop said while the implementation of the licence would result in some changes, it was just an evolution of what GMI was already doing. “There are always operational considerations but custody is not a concern.”
Materials given to Private Portfolios investors would be updated, new investors would receive a new version of the client agreement and existing investors would receive an updated version of their agreements, he said. “We really do sere the FMCA as a step change forward and licensing of participants is a fundamental tenet of that. We believe there are definite benefits to investors.”
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