You are providing Discretionary Investment Management Services (DIMS) when an investor gives you the authority to make decisions about buying and selling financial products on their behalf. To provide DIMS under the FMC Act you must hold a DIMS market services licence issued under the FMA Act.
Licensing and registration
Before you apply for a licence
There are some things you can do to ensure your application runs as smoothly as possible:
review the licensing guides and documents below as they contain all the information you need to know so you can complete and submit your application
set up your RealMe®login details early
focus on the minimum standards – we will assess your business against them when processing your application
In your application, you'll need to demonstrate how you can meet the minimum standards and conditions for your licence - or ask us for a limit or variation using the forms below. This is very important because when a licence is granted, they contain conditions that support your licensee obligations. They include conditions imposed by the FMC Act, the regulations, and any conditions imposed by the FMA. Download Standard Conditions for DIMS licences PDF, 600KB.
Licensing overview report 2017: what you need to know to meet your licence obligations.
This document is for providers of Discretionary Investment Management Services (DIMS) to retail clients. It may also be helpful for people providing custody services to DIMS providers, and to those providing financial advice about DIMS. It contains some key terms and common questions, as well as practical examples and scenarios to help explain our approach to regulating DIMS.
A licensing fee of $2,139 (incl. GST) which includes 15 assessment hours is payable to the FMA.
We may charge an additional fee at the FMA hourly rate where our assessment of an application exceeds the included number of hours stated above. If an additional fee is charged for your application we will let you know in advance and provide you with the reasons for this. We may also invoice you for any costs of external advice or assistance.
Fees for variations to an existing licence
The fee payable to the FMA when you apply to vary an existing licence is $115 (incl. GST). This does not apply to adding a new licence type. Additionally, the FMA will invoice you for time spent assessing the variation application based on the FMA hourly rate $230 per hour for an FMA board member and $178.25 per hour for FMA staff.
Note: We will not issue a new or varied licence until the fee is paid in full. Licence fees are not refundable if an application is rejected.
The FMA receives funding from the Crown and a proportion of our costs is recouped from industry through levies.
A financial markets participant falls within one or more levy ’class’, depending on what financial services they provide.
A levy must be paid for every levy class the financial markets participant falls within. Levies are payable on the relevant leviable event as described in column 3 of Schedule 2 in the Regulations.
Some levy classes have been split in order to recognise the variations in size and nature of different financial market participants.
Most levies are paid when making an annual confirmation to the Registrar of Financial Service Providers (the Registrar).
Most levies are payable to the Registrar, via the (FSPR). However, some levies are payable directly to the FMA. This is set out in column 4 of Schedule 2 in the Regulations.
The following levy classes are invoiced directly by the FMA:
Levy Class 8, Levy Class 8A, Levy Class 10, Levy Class 10A and Levy Class 13.
The table below (see levy class description) provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
Levy Class description
The table below provides a high-level description of each levy class. For the full description of levy classes, see Schedule 2 in the Regulations.
Persons making an application for registration on the Financial Service Providers Register
Registered banks and licensed non-bank deposit takers
Licensed supervisors of debt securities and managed investment products in registered schemes
Managers (of registered schemes)
Persons who undertook trading activities on licensed markets, contributory mortgage brokers, trading financial products or foreign exchange on behalf of other persons (other than persons included in class 6A, 6B, 6C or 6D, authorised bodies that only provide the service under a market services licence held by a person in class 6A or 6D and DIMS wholesale providers) or licensed derivatives issuers
Licensed discretionary investment management service (DIMS) retail providers
Providers of a regulated client money or property service (as defined in section 6(1) of the FMC Act) other than persons included in class 6(a) or 6C
Custodians and persons providing custodial services
Crowdfunding service providers and peer-to-peer lending service providers
Licensed financial benchmark administrators
Licensed financial advice providers
All other financial service providers that are not included in any of classes 2 – 6H
Listed issuers (other than persons included in class 8A)
Small listed issuers
Lodgement of a product disclosure statement (PDS)
Licensed market operators
Licensed market operators that operate growth markets (other than persons included in class 10)
FMC reporting entities that lodge financial statements (or group financial statements) and auditor’s reports
Licensed overseas auditors
Persons that apply for registration or incorporation under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
Persons that are registered or incorporated and required to make annual returns under the Building Societies Act 1965; the Companies Act 1993; the Friendly Societies and Credit Unions Act 1982; or the Limited Partnerships Act 2008
It is the responsibility of each financial service provider to ensure they are registered for the service(s) they provide and have paid the appropriate levies. As part of their online annual confirmation to the Registrar, they must select all of the applicable classes to determine the levies payable and confirm the information they have provided is true, correct and complete.
Under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (the FSP Act) it is an offence to:
provide services you are not registered for or state you are registered for a particular financial service when you are not
make a representation relating to any document or information required by the FSP Act or its regulations knowing that it is false or misleading, or omit any matter knowing such omission is false or misleading.
These offences could result in a fine of up to $100,000 and/or imprisonment for individuals, and a fine of up to $300,000 for businesses.
It is also an offence under the FSP Act to fail to notify the Registrar if any of the details contained on the FSPR are no longer correct. Failure to notify could result in a fine of up to $10,000.
We have discretionary power to waive a levy (in whole or part).
We will only do so if we are satisfied that the circumstances or characteristics of the financial markets participant are exceptional when compared with the circumstances or characteristics of others in the same class, so that it would make it inequitable for the person to pay the levy. The threshold is deliberately high.
The waiver power is not intended to be used to revisit settled policy positions.
Once we receive a waiver application and the fee, we will assess it. If we decide to grant the waiver, we must notify our decision in the Gazette, and publish the decision and reasons for it on our website.
How to apply for a levy to be waived
You will need to email the following information to email@example.com with the subject line ‘Levy waiver application’.
Name of person or entity applying for the waiver.
Contact person for correspondence concerning the application including address, phone number and email.
Indicate the persons/entity who will receive the benefit of any waiver granted.
Specify which class(es) you seek a waiver from and whether a waiver is sought from the full levy or part and the amount thereof.
Let us know your preferred date for any waiver to take effect.
Explain why the waiver should be granted and why your circumstances are exceptional when compared with others in the same class.
Provide all relevant facts in support of your application.
Explain any regulatory benefit of FMA granting the waiver.
Give details of any previous contact with officials (including their names) at FMA or MBIE (including the Companies Office) on the matter.
How to pay your waiver application fee
You can pay by electronic deposit or internet banking. Payment can be made by applicants or law firms making applications on behalf of their clients.
The person paying the application fee must be the person who pays the subsequent fees and costs. For example, if a law firm pays the application fee, that law firm must also pay any additional fees and costs.
We recommend if law firms apply for waivers on behalf of their clients, the parties discuss and agree who will be responsible for paying the FMA’s fees before submitting a waiver application.
How to pay
Electronic deposit or internet banking
Where bill pay is available please select ‘Financial Markets Authority - Other' Otherwise, our bank details are: Bank: Westpac Account name: Financial Markets Authority Account number: 03-0584-0198005-000
To ensure we process your payment correctly please provide the following information: Particulars: Payer’s name* Code: Waiver Reference: Applicant’s name You do not need to forward a hard copy of your application if paying electronically
* This is the name of the person paying the application fee. This person will be invoiced for any subsequent fees and costs. Payment by credit card is not available for this application process.
What are the fees
A payment of $1,265 should accompany each application.
This covers the application fee of $115 set out in the Financial Markets Authority (Fees) Regulations 2011 and an advance of $1,150 (including GST) for fees and costs to be incurred.
These regulations set out charging rates of $230 (including GST) per hour for time spent by FMA Board members and $178.25 (including GST) per hour for time spent by FMA staff.
These regulations are set by MBIE.
How long does it take
Once we have been provided with all relevant information, it generally takes around six weeks to process an application.
This may be longer if any policy questions arise.
If your application is urgent, please provide the date you need the decision by.
You must also provide reasons for requesting urgent consideration.
To notify us of a change to your key people and managers as required by the licensing standard conditions, please send an email outlining what the changes are and the qualifications and experience of the new or replacing personnel, e.g. attach their c.v.
As a DIMS licensee, you must be honest in how you conduct and provide your service, always acting in your client’s best interest.
You must not use information gained as a DIMS licensee to benefit yourself or any other person or cause harm to your client.
You must also exercise care, diligence and the skill of a professional in carrying out your duties.
Check s433and s435of the Act for details of the conduct expected.
DIMS licensees need to make sure their retail clients have all the information about investment decisions, how the investments have performed, and what the fees are. Refer to reg210 and reg 211 for the full list of the information you need to report to retail investors. Your ongoing reporting requirements are:
Transaction information:record of all transactions, name of issuer, the price of the financial products transacted, the amount and date transacted
Assets profile:name of each class of financial product in the investor’s portfolio, who issued the financial products, and the number of products held
Portfolio administration profile:record of all dividends paid, distribution or income received during the period, all percentage-charges paid, individual action fees paid, and other corporate information that might affect an investor’s portfolio (eg, a bonus issue)
Portfolio valuation:current and most-recent valuation of all financial products in the investor’s portfolio; how and when the valuation is done (eg, the market price of the quoted product), and the total value of the financial products in the portfolio.
The investment objective
The investment mix
Any material changes to the strategy during the year
Investor’s portfolio return
Annual and five-year return of the portfolio (pre-tax but after fees)
A bar graph of the portfolio’s return (pre-tax but after fees) with a bar for each disclosure year since the investor started using the service
Name each class of the financial products in the investor’s portfolio, the products’ issuers, and the number of products in the portfolio
The current or most-recent value of each of those financial products
Statements of when and how the valuation was done
The value of the portfolio at the beginning and end of the disclosure year
Details of the amount of cash held for the investor at the close of disclosure year
Details of dividends paid, all interest paid, and other distribution or income received
The total percentage-based charges paid for the investor’s portfolio during the year expressed as a percentage of the investor’s portfolio
The total amount of other charges the investor has paid for the portfolio
The individual action fee paid during the disclosure year for the investor’s portfolio
A pie chart segregating all financial products, by asset category, of the investor’s portfolio at the end of the disclosure year
You need to tell investors if your DIMS is a wholesale service
DIMS licensees need to let their investors know if they are receiving a wholesale service. This is a requirement ofreg194
DIMS licensees must not buy or sell a financial product for a retail investor under a wholesale service unless they have given a prior warning to the retail investors. The retail investors must also acknowledge and authorise the service.
The warning must be prominently displayed on a document telling the investor:
the service is not a retail service
the service is not covered by the licence and FMA Act protections might not apply.
Notifying the FMA
Required reporting to the FMA
Tell us if you breach a limit break
As a DIMS licensee, you are governed by what the investor allows you to do, based on the investment authority - sees437
The investment authority spells out the nature and type of investments you can make, and the amount in each asset type you can invest in
You have obligations to do limit break reporting quarterly (reg 231) and annually, and when your limit break is not corrected (reg 230) within five days of the break happening
As a DIMS licensee, you have to avoid transactions that lead to related-parties benefit (s440).
There are exceptions if you can certify that:
the service is provided to a class of investors, and in the best interests of the investors
the service is provided to only one investor, in the best interests of that investor
Under reg236 you must notify us within 10 working days of the end of each quarter, whether any certificates have been given, and if so provide us with copies of those certificates.
Tell us if you break a service agreement
As a DIMS licensee, you need to make sure you are able to meet the licence obligations (see s412 for details).
You need to tell us if you:
think you have broken any of your licence obligations
have a change in circumstances affecting your licence
have provided misleading material to investors.
All DIMS licensees are FMC reporting entities. FMC reporting entities need to prepare financial statements that comply with generally accepted accounting practice (GAAP), have them audited by a licensed auditor, and lodge them with the registrar.
Annual regulatory return
All licensed DIMS providers are required to complete and submit an annual regulatory return. The return is a series of questions about your business and how your licensed service is used.
The initial reportable period will be 1 July 2021 to 30 June 2022. Completed returns will be due by 30 September 2022. We will notify all licensees when it is time to complete and submit the first regulatory return.
In subsequent years, licensees will be required to complete an annual regulatory return for the 12-month period ending 30 June and submit it to the FMA by 30 September of that year.
The information you provide us through the annual return helps us to:
better understand your business and the services you offer
ensure the information we have on your business is current
There are exemptions for two DIMS licensee categories from having to prepare financial statements that meet GAAP, have them audited by a licensed auditor, and lodge them with the registrar. The table below lists current DIMS financial reporting exemptions:
Level 1 DIMS Providers managing < $100m of retail funds
Level 2 DIMS Providers managing $100m to $250m of retail funds
preparing GAAP-compliant financial statements
auditing financial statements and lodging them with the registrar
prepare financial statements to meet their other existing company or tax reporting obligations
prepare accounting records
prepare GAAP-compliant financial statements and lodge them with the registrar
May need to:
prepare financial statements to meet their other existing company or tax reporting obligations