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Financial Markets Conduct Act 2013

Licensing and other regulation of market services - Additional regulation of discretionary investment management services - Duties of DIMS licensee

437: Requirement for agreed investment authority

You could also call this:

"Getting permission to manage your investments"

Illustration for Financial Markets Conduct Act 2013

When you invest money through a DIMS licensee, they must get your written permission first. This permission is called an investment authority and it must cover what you want to achieve with your investments. It must also say what kinds of investments can be made and any limits on those investments.

The investment authority must include details about how your investments will be managed, such as what types of assets you can invest in and how much of each type. It must also explain how the investment strategy will be developed and changed, and how performance will be measured. You should be able to clearly understand what is allowed and what is not.

If there are no limits on certain investments, or if things can be changed without asking you first, the investment authority must clearly say so. The investment authority must follow the rules set out by the FMA under subpart 4 of Part 9, if there are any. This ensures that your investments are managed in a way that is fair and transparent.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4091641.

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Part 6Licensing and other regulation of market services
Additional regulation of discretionary investment management services: Duties of DIMS licensee

437Requirement for agreed investment authority

  1. A DIMS licensee must ensure that there is a written investment authority granted by the investor for the service.

  2. The DIMS licensee must ensure that the investment authority provides adequately for the investment objectives and the scope of the investment authority, including the following matters:

  3. the nature or type of investments that may be made, and any limits on those; and
    1. any limits on the proportion of each type of asset invested in; and
      1. the methodology used for developing and amending the investment strategy and for measuring performance against the investment objectives.

        1. However, if there are no limits on the investment authority on a matter referred to in subsection (2)(a) or (b) or if the matter is capable of change without the prior written consent of the investor, the investment authority must clearly disclose that fact.

        2. The investment authority must provide for the matters set out in this section in accordance with the frameworks and methodologies specified in notices issued by the FMA under subpart 4 of Part 9 (if any).