PIMFA Weekly News Bulletin - 15 January 2024 by PIMFA

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Featured: Consumer Duty, DE&I, T+1 and Anti Money Laundering

PRESS RELEASES

ABOUT PIMFA

CONSUMER DUTY

WEALTHTECH

PIMFA WEEKLY NEWS BULLETIN 15 January 2024

The 2024 Q1 PIMFA Asset Allocation Survey is OPEN Complete this quarter's survey, and members can: •

Receive a complimentary, 40-page report, showing how the strategic asset allocations of your firm’s model portfolios compare to the peer average.

•

Ensure the index weight methodology for the MSCI PIMFA Private Investor and the Equity Risk Index Series’ remain relevant benchmarks for the UK wealth management sector.

Click here to submit

Consumer Duty Paper and Conference PIMFA's paper 'Impacts on the Wealth Management and Financial Advice Sector' aims to provide a snapshot of current impacts and progress against Consumer Duty requirements. Focusing on four main areas of change (propositions, fee structure, customer communications and support, governance and culture), the examples set out provide evidence of the changes and organisational renewal taking place as a result of Consumer Duty. The paper can be downloaded here. Also, taking place next month, our hugely popular conference returns this year with a host of experts to consider the state of play after seven months of the Duty. It will cover where implementation has worked well, where the sector still has work to do, and how much of a tangible impact has been made on living up to the ideals aspired to by the regulatory impetus, in particular the event presentations and discussions will dive into the following: •

PIMFA introduction and update

•

Keynote Speech: Six months in…

•

Vulnerable Customers & Consumer Duty

•

Cultural Progression - evidencing a consumer centric culture

•

Board attestations - what makes for a good pack? Implementation

•

Guidance for Closed Products

•

Using RegTech to improve Consumer Duty

•

Reflecting on recent developments in supervision & enforcement

Consumer Duty – ignore co-manufacturing at your peril Feedback from members suggests that there is still some confusion in the market about whether a co-manufacturing arrangement exists when an adviser and a discretionary fund manager (DFM) work together to deliver an investment service to the adviser’s clients. Given the Consumer Duty's focus on ensuring that consumers understand the services they receive

and the charges they incur, firms must accurately identify and document all the comanufacturing relationships that they are party to. Consequently, PIMFA has joined with DFM Connect and threesixty services LLP to produce an article outlining the application of co-manufacturing requirements to adviser/DFM relationships and the clear regulatory imperative for structuring and documenting such relationships accurately. The article also links to additional resources on Consumer Duty and adviser/DFM relationships. Read the article here.

CP23/20: Diversity and inclusion in the financial sector – working together to drive change In PIMFA’s response to the FCA’s CP23/20 we broadly welcomed the proposals, which are clearly aimed at achieving faster and more measurable progress on diversity and inclusion in the financial services sector. Additionally, we also pointed out issues that would improve the proposals and help firms achieve meaningful change. You can read the full response here.

PIMFA Operations Forum The next Operations Forum will take place online on Thursday 18th January from 3pm to 4pm. The agenda includes: •

CREST update – latest news from Euroclear - Charlie Pugh / Glenn Cooper, Euroclear

•

Regulatory update – Alex Roberts, PIMFA

•

Shell plc – election for sole electronic notification of all non-dividend related corporate events – Paul Vos, Senior Manager, Structured Finance, Shell International BV

•

T+1 / Accelerated Settlement Taskforce update – Kevin Sloane, PIMFA

The PIMFA Forums are open to representatives from all PIMFA Members and Associate firms. If you or any of your colleagues would like to attend the Operations Forum and are not currently on our distribution list, please email Heidi Bryant.

PIMFA Regulatory Forum The next Regulatory Forum will take place online on Tuesday 23rd January from 3pm to 4pm. The agenda items include updates on: •

FCA CP23/24 Capital deduction for redress

•

HMT/FCA DP23/5 Advice Guidance Boundary Review

•

ICMA/IRSG Voluntary code of conduct for ESG ratings and data products provider

•

UK-Switzerland agreement on mutual recognition in financial services (The Berne Financial Services Agreement)

•

PTRA/BoE CP26/23 - Operational resilience: Critical third parties to the UK financial services sector

•

FOS 2024/25 Plans and budget consultation

The PIMFA Forums are open to representatives from all PIMFA Members and Associate firms. If you or any of your colleagues would like to attend the Regulatory Forum and are not currently on our distribution list, please email Heidi Bryant.

Accelerated Settlement Challenges roundtable - 'The impact on retail investors of T+1' 31 January 12:15 - 14:45, Euroclear, Watling House, 33 Cannon Street, London EC4M 6SB In its December 2023 update, the Accelerated Settlement Taskforce noted that following engagement with many UK firms, there is 'the broad consensus that the question is how and when the UK moves to T+1, and not whether it should do so.' The taskforce is now looking at a two-phase approach to implementing T+1, with phase 1 establishing market standards and ensuring that everything that needs to happen on Trade Date can do so; phase 2 would be the actual transition to T+1.

The taskforce is keen to hear from all stakeholders, including wealth management and financial advice firms on the issues, concerns, opportunities and benefits that T+1 could bring to our community and clients. We are grateful to Gary Wright and his colleagues at ISITC Europe. who have agreed to facilitate a roundtable which will explore T+1 from a wealth management / retail investor perspective, and to Euroclear, who have kindly agreed to host the session at their 33 Cannon Street offices on Wednesday 31 January between 12:15 - 14:45. A sandwich lunch will be provided. If you would like to attend the roundtable, please complete the registration form on the ISITC Europe website: Please book early - attendance will be on a 'first come, first served' basis. If you have any questions, please contact Kevin Sloane.

UK signs first of its kind financial services agreement with Switzerland UK and Switzerland signed the Berne Financial Services Agreement – a ground-breaking pact on financial services cooperation. The agreement sets sectors where the UK and Switzerland will mutually recognise each other’s domestic laws and regulations on financial

services, making it easier for corporate and high net worth clients in the two markets to do business with each other and enabling the frictionless, cross-border provision of financial services between the UK and Switzerland across areas such as asset management, banking, and investment services. Both countries will also have the freedom to revise or introduce new domestic regulation as they see fit. Financial advisers will also benefit. British financial advisers to high-net-worth individuals will no longer need to be registered by Swiss registration bodies to serve Swiss clients. This will remove requirements to sit Swiss examinations or provide documentation evidencing suitability, cutting red tape for the UK’s financial advisory industry. The agreement also secures unique access for British insurance brokers to the Swiss market. From the start of 2024, Switzerland will require any non-Swiss firms to establish a base in the country before serving Swiss clients. The UK will be the only country in the world not required to do this, putting British brokerage firms at a significant advantage to international competitors as they can continue to do business as they always have done.

Home Office Guidance on Money Laundering Reporting Obligations (DAML exemption) The Home Office has published guidance on Defence Against Money Laundering (DAML) exemptions to assist reporters with their reporting obligations and clarify the operation of the exemptions. When the Economic Crime and Corporate Transparency (ECCT) Act 2023 came into force, the Act introduced several DAML exemptions from the principal money laundering offences, including: •

Exempting the whole of the AML regulated sector when ending a relationship with a customer and paying away property with a value below £1,000.

•

Clarifying the handling of mixed assets where only part of the assets are suspected to be criminal proceeds.

The guidance sets out the Government's position on reporting obligations in the Proceeds of Crime Act 2002 as amended by the ECCT. In particular, reporters are advised to consider the application of the guidance to their processes for suspicious activity reports (SARs). To read the guidance, please visit the Government website here.

A Joint Consultation on the FSCS MELL 2024/25 The Bank of England, the FCA, and the PRA have published a joint consultation paper (CP) setting out the proposals for the Management Expenses Levy Limit (MELL) for the Financial Services Compensation Scheme (FSCS) for the year 2024/25. The CP includes a proposed management expenses budget of £103.1 million (a £3.3 million increase on the 2023/24 budget of £99.8 million), and a proposed unlevied reserve of £5 million (a 50% decrease from £10 million reserved in the preceding year). The CP is open until 12th February 2024 and the final rules are expected to be in place for the start of the upcoming financial year on Monday 1st April 2024. Please contact Simon Harrington should you have any questions or require more details and you read the CP here.

FCA Rule Review Framework The FCA has published its finalised rule review framework, which was developed under the Financial Services and Markets Act 2023. The FCA consulted on a draft approach in July 2023 and this finalised framework reflects the feedback received. In particular, the framework explains how the FCA monitors outcomes of its rules, investigates significant concerns about a rule by gathering metrics and qualitative intelligence, and the FCA’s intension to conduct a review if required. The FCA plans to explain adherence to the framework in relevant publications on rules, including consultation papers and policy statements. To read the finalised Framework, please visit the FCA website here.

Global Returns Project event – Closer and Closer to 2071 It’s been 10 years since climate scientist Chris Rapley first performed his play 2071: The World We’ll Leave Our Grandchildren. In its five-star review, The Guardian called it ‘better than good: it is necessary’.

In the past decade, the world – and the Climate Crisis – have changed. Join the Global Returns Project on 7th February as Chris reads excerpts from 2071 and reflects on its implications for our planet today. Following Chris’s remarks, renowned environmentalist Jonathon Porritt will discuss our options for making a difference as individuals – and the particular power of charitable giving to climate organisations.

PRESS RELEASES

PRESS COVERAGE

PIMFA’s Under 40 Leadership

Professional Adviser: More than one

Committee report reveals need for

third of 18-34-year-olds trust

advice industry to focus on the future

'finfluencers'

PIMFA welcomes FCA proposals for

Marketing Beat: Gender gap:

Sustainability Disclosure

Financial firms missing out on £36bn

Requirements

marketing opportunity

PIMFA welcomes the Financial

Professional Paraplanner: Greater

Conduct Authority’s proposals for

personalisation and simplified advice

improving financial advice to

would increase advice engagement -

consumers

PIMFA

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