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PIMFA WEEKLY NEWS BULLETIN | 17 May 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.
The Queen’s Speech
On 11 May the Queen outlined the Government’s priorities marking the State Opening of Parliament and set out the Government’s legislative agenda for the Parliamentary session ahead. A significant proportion of the speech was dedicated to the Government’s 'levelling up' agenda. They plan to enable lifelong learning through the Skills and Post-16 Education Bill, extend 5G mobile coverage through the Product Security and Telecommunications Infrastructure Bill, authorise the next phase of HS2 through the High Speed Rail Bill, and deliver on its manifesto promise to build 300,000 new homes a year by reforming the planning system to make it “simpler, faster and more modern”.
Ahead of COP26 later this year, the Government has attempted to signal its green credentials, reintroducing the Environment Bill that began its Parliamentary passage in the previous session and sets binding environmental targets. The Government will also introduce the Subsidy Control Bill, which will set out a new, post-Brexit regime for state aid. A Procurement Bill will also simplify procurement in the public sector, giving small and medium-sized companies greater opportunities to secure Government contracts and
allowing the public sector to ‘buy British’ when the deals are not subject to international trade rules. The Online Safety Bill was also confirmed and the government said the new laws will “lead the way in ensuring internet safety for all, especially for children, whilst harnessing the benefits of a free, open and secure internet”. Read the latest about our campaign for the inclusion of financial harms into The Online Safety Bill here.
The Government is also proposing a series of constitutional reforms. A Dissolution and Calling of Parliament Bill will get rid of the fixed five-year period between general elections and return the power to call early elections to the prime minister. The Electoral Integrity Bill proposes that registered voters will need to take ID when casting votes in elections and the Judicial Review Bill will seek to redress what the Government views as an imbalance between the executive and the judiciary, following a number of controversial Brexit court cases that bled into the political arena.
ONS - First quarterly estimate of Gross Domestic Product (GDP)
According to the latest GDP figures, the UK is recovering from the pandemic faster than expected. The figures published on 12 May show a 2.1% expansion in March, although the economy contracted by 1.5% over the first three months of the year. The growth in March was helped by the reopening of schools, Covid 19 vaccinations and testing, and consumers spending their lockdown savings. The level of GDP is now 8.7% below where it was before the pandemic at Q4 (Oct to Dec) 2019. Compared with the same quarter a year ago, when the initial economic impacts of the pandemic began to show, the UK economy fell by 6.1%.
Financial Reporting Council on changes in remuneration reporting
The Financial Reporting Council (FRC) has said that companies are better aligning their Board remuneration policy and practices with long-term shareholder interests, according to new research conducted by the FRC and The University of Portsmouth. The research assessed a sample of FTSE 350 companies to determine the extent to which they have
applied requirements set by the updated UK Corporate Governance Code in 2020, to find out more about companies’ response to the Code’s revised Principles and Provisions, and the response of shareholders in terms of voting.
The research concluded that FTSE 350 companies are disclosing more information on remuneration and a majority of companies report linking individual rewards to strategy and long-term performance. However, there remains a lack of detail on the application of the Code principles and provisions. The FRC was pleased to see that companies are now disclosing more information about engagement with shareholders and there is better reporting on alignment of remuneration with long-term performance. Also, the findings of the research supported those from the Review of Corporate Governance Reporting published in November 2020. Overall, the report showed that the Code requirements on directors’ remuneration have had a positive impact on reporting but many company reports lacked detail and outcomes. While companies are giving more information there is still a danger of boilerplate disclosures.
Professional Qualifications Bill
New laws to allow skilled professionals from around the world to have their qualifications recognised in the UK were introduced to Parliament on 12 May, to 'further strengthen UK professions’ reputation for excellence and help to ensure the UK can address where the demand for skills is not currently being met'. Following Brexit this new legislation has been introduced so skilled professionals can have their qualifications recognised in the UK where they meet UK standards.
Regulators will have the autonomy to assess qualifications, and to pursue arrangements with counterparts in other countries in the interests of their professions. The new laws will help meet the demands of individual professions in different parts of the UK by identifying professions that will benefit from access to global talent. The Professional Qualifications Bill will establish an effective regulatory framework for professional qualifications that meets the needs of all parts of the country and supports UK professionals to deliver services overseas.
Latest PIMFA Press Releases
PIMFA welcomes FCA proposals to enhance consumer protections but warns against unintended consequences
Latest PIMFA Press Coverage
Daily Mirror: Martin Lewis and Which? join forces urging Government to get tough on web scams
PIMFA welcomes reduction in FSCS levy but continues to call for fundamental reform
Daily Mail: We launch campaign to fight growing scourge of online financial fraud in
PIMFA welcomes publication of Online Safety Bill but urges Government to do more to tackle clone investment fraud and fake online adverts
Britain: Stop the online SCAMMERS
Daily Mirror: Invasion of the online clones: PIMFA welcomes inclusion of the Online Safety Bill in Queen’s Speech but urges Government to include financial harms within the scope of the Bill
how ruthless fraudsters use details of respected firms to target savers
Daily Mail: Ministers fall at first fence in war PIMFA launches fraud prevention guide as part of campaign to protect consumers from online fraud
on scams: No laws on internet fraud included in new Online Safety Bill
The Herald: Bid to make Facebook and Coalition of organisations urges government to use Online Safety Bill to protect people from an avalanche of online scams
Amazon pay legal price for online scams as Scots fraud soars during lockdown
Which? Fraudsters peddling fake Interactive Investor and ING Bank investments, warns Which?
Economic Crime Plan – Progress Report
On the 4th May 2021, the Government and UK Finance published a joint ‘Statement of Progress’ on the Economic Crime Plan for the period July 2019 to February 2021. The Economic Crime Plan was launched in July 2019 as a public/private collaboration on
confronting economic crime and set out 7 strategic priorities and 52 actions. The key findings of the ‘Statement of Progress’ were the following: •
There is an improved understanding of potential economic crime and fraud threats, supported by the publication of the UK’s 3rd National Risk Assessment and the development of the National Economic Crime Centre ‘Fusion Cell’;
•
Anti-money laundering requirements have been updated;
•
Additional funding of £63 million has been given to the Home Office for combatting economic crime;
•
Further momentum was needed, especially in the area of fraud and so an additional 7 actions were provided to enhance the Plan, including delivering a comprehensive Fraud Action Plan, continuing with the SARs reform, finalising a sustainable resourcing model and developing legislative proposals to tackle fraud, money laundering and seizure of criminal assets.
You can read the ‘Statement of Progress’ in full here.
EVENTS & LEARNING
PIMFA Webinar HOW TO BUILD AN INNOVATIVE FINANCIAL ADVISOR IN UNDER SEVEN MONTHS? 19 May 2021 FREE to attend In this FREE 60 minute webinar, join Kidbrooke and Evida as they take you on the successful journey of digitalising a wealth management business. Here they will demystify the process of creating an innovative, modern financial adviser supported by cutting edge
technology, proving that you don’t have to be a huge financial institution to afford it and that this journey doesn’t take years, but merely a few months! For more info and to book, please click here.
View all other 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 will be FREE for advisers, wealth managers and paraplanners to attend. On the agenda, there will be a focus on ‘back to growth’ and the importance of ESG. The agenda will include Hortense Bioy, Director, Sustainability Research, Global Manager Research at Morningstar presenting on Greenwashing. We’ll also feature a session from foreign affairs broadcaster, Tim Marshall on Geopolitics as well as the importance of a flexible approach when it comes to Fixed Income Investing with Jim Leaviss, Head of Public Fixed Income and Fund Manager of the M&G Global Macro Bond Fund. Find out more and register here.
FCA FS21/8: Notice periods for open-ended property funds
FS21/8 provides feedback on the CP20/15 proposals for the imposition of 90-180 day notice periods on redemptions of units in OEPFs. The FCA has acknowledged that implementing notice periods will entail significant operational and technical challenges for all firms active in fund business. Given this, and work being undertaken on the creation of Long Term Asset Funds, the FCA will not take a final decision on its proposals until Q3 2021 at the earliest. If the CP20/15 proposals are confirmed, firms will be given an implementation period of 18-24 months to make the necessary changes. The Feedback can be found here.
FCA CP21/12: A new regime for investing in long term assets
CP21/1 proposes a new category of authorised open-ended fund - the Long Term Asset Fund (LTAF) - that is designed to invest in illiquid assets such as venture capital, private equity, real estate and infrastructure. LTAFs will be set up with redemption notice periods and other liquidity management features taking account of the liquidity profile of underlying assets. The distribution of LTAFs will initially be restricted to professional investors and sophisticated retail investors. However, the FCA is considering what additional safeguards might enable wider retail access to such funds in the future. The CP can be read here.
FCA proposes stronger protection for consumers in financial markets
The FCA has set out plans for a new Consumer Duty, which will set a higher level of consumer protection in retail financial markets for firms to adhere to.
As part of the FCA's ongoing work to monitor and address behaviour that could lead to poor outcomes for consumers, they are proposing to expand their existing rules and principles to ensure firms provide a higher level of consumer protection consistently, which will enable consumers to get good outcomes.
The new Duty will drive a shift in culture and behaviour for firms, meaning that consumers always get products and services that are fit for purpose, that represent fair value and are clearly communicated and understandable. This will help, rather than hinder, consumers to make good choices and be confident that they will receive good customer service. Read PIMFA's initial response here and the FCA consultation paper here.
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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