PIMFA Weekly News Bulletin - 1 June 2021

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PIMFA WEEKLY NEWS BULLETIN | 1 June 2021 Dear Nigel,

Welcome to the PIMFA Bulletin; grab a coffee and take 10 minutes to read this week's latest industry news impacting you and your firm.

UK secures G7 commitments to tackle climate change

The Climate and Environment Ministers of the G7 have secured an historic commitment which will put climate, biodiversity and the environment at the heart of worldwide COVID19 recovery. This year is already the first ever ‘net zero G7’, with all countries committed to reaching net zero carbon emissions by 2050 at the latest meeting, with ambitious emissions reduction targets in the 2020s.

All G7 members signed up to the global ‘30x30’ initiative to conserve or protect at least 30% of the world’s land and at least 30% of the world’s ocean by 2030 and committed to ‘30x30’ nationally. The group also agreed to phase out government funding for fossil fuel projects internationally – following a leading commitment made by the UK in December.

The G7 have agreed to increase the quantity of finance for climate action, including for nature, in order to meet the $100bn per annum target to support developing countries.

Securing meaningful action from leading economies to tackle climate change is a priority for the UK’s G7 presidency, ahead of COP26 in November.

City of London Corporation calls for greater UK – US Collaboration on climate related financial services regulation

The City of London Corporation has published its report on trans-Atlantic cooperation in climate-related financial services regulation - "Data, Direction, Dialogue: Opportunities for UK-US Collaboration in Climate-related Financial Services Regulation”. The report presents a series of recommendations for UK and US policymakers, outlining the unique opportunity the two countries have to lead the world in climate regulation and data.

The report argues the UK and the US should collaborate to ensure climate data is reliable, comparable and verifiable; develop standardised climate-related FPS disclosure frameworks, establish and include comparable metrics and risk assessments within climate-related financial services regulation and advocate urgently for maximum collaboration in the development of globally consistent standards, which leverage existing structures. In the UK, estimates suggest a five-fold increase in investment, from circa £10bn per year to £50bn in 2030 is needed to achieve net-zero targets.

The scale of the problem means that the public sector will not drive these changes alone.

With public finance unable to fill the gap, financial services firms will have a central role to play. But neither will finance in any single country shift the dial. Cross-border capital flows will be an essential element of success.

UK – US Financial Regulatory Working Group discuss further co-operation

The US-UK Financial Regulatory Working Group, held its fourth meeting on 20 May 2021.

The Working Group discussed the financial sector implications of the UK’s withdrawal from the EU, along with areas of mutual interest where international and bilateral cooperation could be intensified.

Participants discussed the importance of preserving the global asset management industry’s portfolio management delegation model, continuing efforts to promote the free flow of cross-border financial services data, and the need to avoid regulatory fragmentation

and data localisation as financial authorities seek to strengthen operational resilience in the financial sector.

The Working Group also noted the risks around any regulatory driven fragmentation in derivatives clearing markets and highlighted the benefits that the global nature of derivatives clearing bring. Issues and priorities relating to sustainable finance were also discussed including US administration efforts to tackle climate change and other issues relating to sustainable finance, and the UK’s implementation of its Green Finance Strategy, development of a Green Taxonomy and forward-looking metrics.

CityUK report calls for action on Crypto-assets

A new report from TheCityUK last week, called on the Government and regulators to act quickly to capitalise on the opportunities arising from the rapid growth of crypto-assets and the use of Distributed Ledger Technology (DLT) and take a world-leading position in this high-growth sector.

The ‘Crypto-assets: Shaping UK regulation for innovation and global leadership’ report urges policymakers to use the UK’s newly acquired regulatory freedom and nimbleness to steal a march on global competitors and drive future innovation and competitiveness. The report also stresses the need to strike a balance between encouraging innovation, protecting consumers and providing regulatory clarity, while also ensuring legislation is proportionate and takes a technology neutral approach. The UK has a valuable opportunity to shape its response to DLT and crypto-assets in a way that encourages competitiveness within the UK.

Failure to address the subtleties in the way these systems can be deployed in any new regulation may create significant legal uncertainty and give rise to the potential for regulatory arbitrage. Crypto-assets, by their nature, require regulatory coherence with other leading jurisdictions to ensure cross-border interoperability, legal clarity, and certainty. Raising consumer awareness of the risks associated with crypto-assets will be important in ensuring consumer protection. Transparency on the part of issuers and other service providers is critical to protect consumers.

Dr Kay Swinburne appointed as new IRSG Chair

Dr Kay Swinburne, Vice Chair of Financial Services for KPMG UK and former Vice Chair of the European Parliament’s influential Economics and Monetary Affairs Committee (ECON), has been appointed the new Chair of the International Regulatory Strategy Group (IRSG).

The role was previously held by former City Minister Mark Hoban. Dr Swinburne played a pivotal role in shaping EU and global financial services legislation in her role as an MEP, including setting up the EU supervisory bodies (ESAs, SSM, SRM), Capital Markets Union (EMIR, MiFID II, Prospectus, CCP Recovery & Resolution), and the broader Banking Union files.

The IRSG is an advisory body for the City of London Corporation and TheCityUK and comprises senior practitioners from across the financial and related professional services industry. it focuses on promoting regulation that encourages open and competitive global markets. Recent priorities have included the UK’s regulatory framework post-Brexit, ESG and a green finance taxonomy, and priorities for the G7 held in the UK this summer.

European Parliament passes UK – EU data adequacy resolution

The European Parliament formally passed a resolution on the data flows deal with the UK by a narrow margin of 33 votes on 21 May. Before the vote, MEPs debated the UK adequacy decision with some criticising UK data standards around surveillance. Others argued the UK has a high level of data protection and that adequacy decisions help businesses and facilitate cross-border crime-prevention.

The European Parliament’s resolution states the UK’s data protection framework is similar to that of the EU but raises concerns about its implementation. This refers to the exemptions in the areas of national security and immigration. MEPs also have concerns about onward data transfers and sharing of EU citizens’ data across the Atlantic because of the UK’s data-sharing agreements with the US.

MEPs are also concerned about the potential implications for data flows to countries that

do not have an adequacy decision from the EU, if the UK joins the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). The European Commission has a month to finalise the UK data adequacy decision and is not bound by the Parliament’s resolution.

Latest PIMFA Press Releases

Rosie Reynolds Marketing joins as the latest PIMFA Plus Partner to help firms develop their digital futures

Latest PIMFA Press Coverage

Rosie Reynolds Marketing becomes latest PIMFA Plus Partner

PIMFA voices disappointment at fee approach for Appointed Representatives

International Investment: Mass UK adviser

PIMFA launches their first industry awards to recognise companies promoting diversity and inclusion

Professional Adviser: Marilyn Cole: Is it finally

PIMFA welcomes FCA plans to stop Claims Management Companies from ‘Phoenixing’

Professional Adviser: ARs face £10m fixed fee

exit fails to materialise

time for a simple advice channel?

bill under 'flawed' FCA plans PIMFA welcomes FCA proposals to enhance consumer protections but warns against unintended consequences

Raconteur for The Sunday Times: ‘We want to build a robust advice industry that is fit for the future’

Reuters: UK financial watchdog takes aim at 'phoenix' claims scam

EVENTS & LEARNING

Diversity & Inclusion Awards Entries Close: 17 August | Event Date: 20 October We are very proud to announce the inaugural PIMFA Diversity & Inclusion Awards will be taking place on 20 October and entries are NOW OPEN! Please click here to view the categories.

One of the PIMFA priorities is to develop, support and encourage initiatives to create a more diverse and inclusive industry, and we know there are pockets of D&I good practice that remain hidden or unrecognised, so we are launching the PIMFA D&I Awards 2021 as an opportunity for your firm and colleagues to be recognised for the wonderful work being carried out.

Entry to the PIMFA D&I Awards is free and open to all firms and stakeholders in the wealth management, investment services and financial advice sector.

Organisations both large and small will have examples where they are working to develop diversity and inclusion within their organisation or the industry.

Please click here to find out more and start your entry.

View upcoming PIMFA Events and Learning here.

PARTNER EVENTS

Morningstar Investment Conference 29 - 30 June

The annual Morningstar Investment Conference will be taking place as a digital event again this year, hosted online on 29-30 June.

The conference is FREE for advisers, wealth managers and paraplanners to attend.

The agenda continues to grow! As well as sessions on ESG and how it can be implemented into the Adviser practice; Greenwashing (presented by Hortense Bioy, Director, Sustainability Research, Global Manager Research at Morningstar, a session from foreign affairs broadcaster Tim Marshall on Geopolitics and Jim Leaviss, Head of Public Fixed Income and Fund Manager of the M&G Global Macro Bond Fund who will be discussing the importance of a flexible approach when it comes to Fixed Income Investing.

More speakers will be joining and you can rest assured that we will include research, insights, and analysis from our Morningstar subject matter experts that can help us all explore new horizons for empowering investor success.

All content from the conference will be available on demand until 30 July.

Find out more and register here.

All reporting firms moved to FCA’s new data collection platform RegData

The FCA has completed the move to RegData, which has replaced Gabriel as their data collection platform, with the last group of firms now moved across. Since the transition began in October 2020, they moved 52,000 firms and 120,000 users to RegData in groups, based on their reporting requirements.

The FCA are keen to hear from firms that have used RegData and invite them to complete a short survey on their experience of the system so far. They are grateful to those who have provided feedback already. They are already using this feedback through RegData’s flexible technology to improve the system’s performance across a number of submissions.

CP21/9 Changes to UK MiFID’s conduct and organisational requirements

The FCA have published a Consultation Paper to gather feedback on their proposed changes to two areas to the conduct and organisation rules in UK MiFID.

They are consulting on changes to the existing inducement requirements for research relating to SMEs as well as to Fixed Income, Currencies and Commodities. They are also consulting on the removal of two sets of best execution reporting obligations on firms. This consultation forms part of wider work that the FCA are working on with HM Treasury concerning capital markets reform.

They are asking for feedback to the CP by 23 June 2021 and responses will be used to help inform their final policy statement.

PIMFA's Consultation Responses

PIMFA’s latest Consultation Response is to the FCA on restricting CMC charges for financial products and services claims.

Read this and all other PIMFA consultation papers here.

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