Some advisers are worried that the new rules for DIMS, introduced as part of the Financial Markets Conduct Act, are too onerous.

From December 1, everyone who is deemed to be providing class DIMS will have to be licensed. AFAs who are providing personalised DIMS can operate without a licence but will also be more strictly scrutinised.

There’s been debate in recent days over what constitutes DIMS.

Jeremy Muir, of Minter Ellison Rudd Watts, said:  “There’s two elements to it. One is that the adviser has the discretion to make the decision and one is that they have the authority [to enact it]. One or the other is not enough to constitute DIMS.”

He said situations where an adviser had the authority to do things under initial instruction from the client would not necessarily be a DIMS scenario. 

But if someone had the power to make adjustments to a client’s portfolio without reference to them, that was technically DIMS, even if the changes were small.

Tim Williams, of Chapman Tripp, said the emphasis was on who was making the decision. “If you’re consulting with a client but you’re the one making the decision, that’s DIMS.”

Muir said another hurdle for many advisers would be determining whether they were offering personalised DIMS or class DIMS under the new law.

He said it was likely that a lot of people would start adjusting their systems now to fit into the right category. Muir said he expected more guidance from the FMA on what constituted class advice.

The FMA’s latest consultation document had asked whether a transitional period was needed for the December 1 deadline, which would allow some advisers more time to work out where they would fit.

Those who were worried about the timetable should make a submission, he said. “If you’re offering class advice you need a licence by then but we’re only getting through the process to even apply for the licence and making the decision now.”

Williams said the licensing for class DIMS was to bring providers in line with fund managers. He said model investment portfolios would be the sort of system that would be counted as a class DIMS.

He said the difference between class and personalised DIMS could get blurred at times. “But if you’re saying this is the type of product I recommend in general for everyone, that’s class DIMS. If you’re saying this is the type of product I recommend to you taking into account your personal circumstances, that’s personalised.”