AFAs face more DIMS hurdles

The Ministry of Business, Innovation and Employment has released another discussion paper, ahead of the introduction of the Financial Markets Conduct Bill (FMCB).

The FMCB will introduce a number of changes to how financial products are created, promoted and sold.  It includes changes under the FAA to the way DIMS and custodians are regulated. The discussion paper is designed to seek stakeholder views on potential regulations relating to DIMS.

Among proposals in the discussion paper is a plan to align the obligations of AFAs who offer personalised DIMS with the obligations applied, under the FMCB, to large-scale, licensed providers providing class advice, such as investment via wrap platforms. MBIE also wants to change the way AFAs disclose information about DIMS to their clients, their client agreements and the frequency of their reporting.

But one of the most significant changes for advisers is that AFAs wanting to offer DIMS will have to pass good character and competence standards and also prove that they have systems in place to minimise undue risk to their clients.