The FMA says the guide is intended to offer information on what people can expect when they apply for a DIMS license.

Those offering class DIMS require a license from December 1. The FMA has indicated that most DIMS services will be class.

The guide indicates licensing applications will ask for a lot of detail. It says the FMA will want information on a business’ total FUM, retail FUM, number of clients, money-handling, use of wrap platforms and products.

It will also want to see the business structure, how directors and senior managers meet “fit and proper” standards, and details of how new clients will be approached.

Would-be DIMS providers will have to lay out how they will meet minimum research standards for selecting investments, how they will stress-test portfolios and how they will monitor investments.

They need to give information on any outsourcing, how staff will be supervised, their governance and oversight, record-keeping, business continuity plans, and persuade the FMA that they have a sufficiently strong balance sheet.

The FMA says small businesses may have relatively simple processes that are not fully documented but they would still need to explain them thoroughly.

Robert Oddy, of SiFA, said the guideline was interesting for its length.

He said licensing would be a tough call for independent advisers. “The institutional funds management approach is being adopted with a lot of things.. there seems to be an attempt to push out smaller advisers and have advisers just as asset gathers or money gatherers for the institutions.”

Adviser Murray Weatherston agreed the guidelines were lengthy: “Seems to assume applicants will be like General Electric; I wonder how they will handle sole adviser practices where the AFA does just about everything....once again it favours the big end of town.”

Alan Clarke said it would drive advisers like him to a fund manager. “All a huge paper war to get and keep a DIMS  -  all  pretty much beyond the small adviser’s resources – I neither have the time or energy for another level or regulation.”

Adviser Duncan Balmer said he did not think the FMA was right with its definition of class advice: “I’m still hoping that FMA will come to understand that the fact that all my clients fall into a small number of risk profiles, and they all have portfolios made up of (differing proportions of, and different mixes of) a limited number of approved investments, does not mean that I am not offering a genuinely personal service to each of my clients.”

A class DIMS licence application will cost $3565 but the FMA can charge more for more complex applications.