Under the new legislation, DIMS providers, peer-to-peer lenders, crowd funding providers, independent trustees, derivatives issuers and managed investment scheme managers will have to be licensed.

The FMA will issue licenses from April.

AFAs who want to offer class DIMS to retail investors will need a license.

They can still offer personalised DIMS under the FAA but the FMA is warning that it is not considered personalised if the service is customised from an investment strategy that applies to a class of clients.

To become a DIMS licence-holder, providers will have to prove they have “fit and proper” directors who meet good character and capability requirements, senior managers and other parties, they are capable, have the right operational infrastructure, financial resources and professional indemnity insurance and a solid governance and compliance culture.

Concerns had previously been raised about who would be exempt from the requirement for an independent custodian.

There have been suggestions that there would be some exemptions to the rule – but it was not clear who would be affected, leaving big providers unsure whether to invest the time and money into seeking an independent arrangement.

The FMA has moved to clarify that a bit, saying that in limited circumstances, providers will be permitted to use a custodian related to their business. “We will only consider this if you have sufficient controls to ensure the custodian will act independently for the duration of any licence.”

That might include different directors, separation of staff and incentives to encourage independence.

The FMA is seeking submissions on the proposals. The final date they can be submitted is December 12.