Implemented Portfolios News

Important update to IMA Application requirements

By October 24, 2017 No Comments

On 1 October 2017 a number of changes to the regulations governing the provision of Managed Discretionary Account (MDA) will come into effect.

Whilst there is no impact on existing clients in the IMA service, we want to clearly communicate to you the changes that will affect new clients who apply for an IMA from 1 October 2017.

What has changed for NEW clients?

  1. There is an updated set of offer documents – now called the MDA Contract – that must be provided to each client.
    • The MDA Contract replaces the IMA Agreement and includes all the documents required to be given to the client – T&Cs, Investment Programs and an FSG.
    • The main change concerns the disclosure of the IMA fees and costs which have been updated match the format generally found in PDSs
    • The updated MDA Contract is already available via your online application portals (Netwealth, Off-Platform Application Manager). The updated MDA Contracts for each service are attached for your reference.
  2. As the MDA Provider, Implemented Portfolios has a new obligation to review the initial SOA for each investor prior to them entering the MDA Contract. The purpose of this is to ensure that the recommended investment program is appropriate and to confirm that the disclosures around the IMA service are included in the advice document. If you would like to refresh your templates, IP has sample SOA wording available on IP Connect under “Advice Tools”.

How will you be impacted?
For every new application sent to IP from 1 October 2017, you will need to supply the signed SOA recommending the IMA Service to the client. You can either:

  1. Submit the whole SOA; or
  2. Submit a cut down version of the SOA for review (as we acknowledge that you may not wish to submit the entire SOA for privacy reasons). This must contain at least:
    • The front page
    • The risk review/rating of the client
    • The investment program disclosures
    • The signature page/authority to proceed

How to submit the SOA during the application process
We have prepared a short video to demonstrate how the SOA can be provided to IP for each new application from 1 October 2017.

  1. For Off-Platform IMA accounts
    • Complete the application as normal via the Off-Platform Application Manager portal; and
    • Upload the SOA via the ‘Upload Documents’ link within the Off-Platform Application Manager portal; or
    • Upload the SOA via the new ‘Upload your SOA’ link on IP Connect. 
  2. For netwealth IMA accounts
    • Complete the application as normal via the netwealth website; and
    • Upload the SOA via the ‘Upload your SOA‘ link on IP Connect

Whilst it is our aim to ensure that processing times are as uneffected as possible by these changes, this will be dependent on the SOA being provided to IP in a timely manner. To ensure the best outcome, please submit the SOA at the same time as the application to avoid any delays.

Please note that:

  • If the SOA is not received, the account will not be opened or traded upon until the SOA is received and reviewed.
  • If the SOA review finds the advice is clearly unsuitable, or does not include the relevant investment program disclosures, the account will not be opened and we will contact the you to discuss the revisions required.

What has not changed
There has been no change to the requirements/process for you to review the suitability of the IMA service for your clients every 13 months. If the client circumstances have not significantly changed, this may be confirmed either by a file note following a review meeting or phone call, or by a ROA. You will need to continue to provide IP with the date the review was completed, but you do not need to submit anything to IP for review. Please keep in mind that your licensee may have their own requirements for advice reviews in addition to ours – so please familiarise yourselves with these.

Whilst we appreciate that these new review requirements represent an additional step, particularly for Client Service teams in the IMA Service application process, it is unfortunately a measure that we must comply with to meet our obligations as a MDA Provider. For anyone who is interested in receiving a copy of the new MDA Regulations please contact us and we would be happy to email them to you.

As always, the IP team are here to answer any questions or concerns that you may have about this. Please don’t hesitate to reach out if you would like to discuss any of this in more detail.

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