PIMFA WEEKLY NEWS BULLETIN
17 July 2023
PIMFA Membership Portal Upgrade
The PIMFA Membership Portal has gone through a major overhaul in both functionality and design to make updating your details even easier. Changes include the option for any firm to have up to two people who can access the Portal – a ‘Firm Administrator’ and a ‘Staff Administrator’ – and the addition of a Resources page where you can download PIMFA’s logo should you wish to use it in your publications and/or digital content.
Full details and a short explanatory video are available here
CONSUMER DUTY CORNER: CHANGING CULTURE
Culture has been at the top of the FCA’s agenda for the past few years, but the introduction of consumer duty has raised expectations even higher on how firms define, embed and measure culture within their organisations. Culture is referred to throughout the FCA’s Consumer Duty finalised guidance and it has been emphasised repeatedly in recent speeches. Sheldon Mills (Executive Director, Consumers and Competition at the FCA), in his speech in May, re-iterated the FCA’s focus on governance, culture and accountability, setting out specific questions that firms should be considering:
1. Does your purpose and culture align with your obligations under Consumer Duty and support the delivery of good outcomes for customers?
Featured: New Membership Portal, Big Tech & AI
2. Is Consumer Duty being considered in all relevant discussions such as strategy, remuneration and risk?
3. Have you made sure your remuneration and incentive structures drive good outcomes for customers?
4. Are you prioritising delivering good outcomes for customers in a changing external environment?
FCA's COO Emily Shepherd in her recent speech, highlighted how culture remains central to the FCA’s supervisory model, noting that firms with healthy cultures will be best equipped to adapt to a changing world and to consumers with changing expectations. She emphasised that ‘firms’ boards and senior management will have to embed a culture in which good outcomes for consumers is central. People management policies and practices, including performance management, pay and bonuses will be critical to doing so. Firms can expect at every stage of the regulatory lifecycle to be asked to demonstrate how their business model, the actions they have taken, and their culture are focused on delivering good customer outcomes.’
Implementing consumer duty is not just about compliance and operational changes, it is also about culture and embedding a consumercentric focus across all aspects of the company and in employees’ mindsets. This runs from aligning an organisation’s purpose to good outcomes for consumers to delivering training for all staff on the duty.
So what steps can firms take?
It is important to look at the key drivers of culture through a consumer duty lens and also to ensure that you evidence and collect data on any steps you take:
Purpose – this should be consistent with the duty and staff should understand how it aligns to delivering good customer outcomes;
Leadership – the firm’s leaders should be competent, accountable and committed to delivering good outcomes;
o Appoint a Consumer Duty Champion
o Ensure there is clear executive accountability for delivery and Board oversight
o Senior management/CEOs must communicate a clear vision and values on consumer duty – tone from the top People – delivering good outcomes should be reflected in how staff are managed and rewarded
o Review job descriptions of relevant staff
o Review reward and incentive structures and performance management frameworks and how this will impact appraisals
o Ensure training on consumer duty is in place (including senior managers) and that staff are aware of the new individual Conduct Rule 6 which requires staff ‘to act to deliver good outcomes for retail customers’ Governance – systems and processes should enable the delivery of good outcomes and identify and mitigate poor outcomes.
The deadline of the 31 July is fast approaching. However it is not a question of ‘getting consumer duty done’. The next step is embedding consumer duty in all aspects of your business and to do this you need to change culture and the way people behave and think. This isn’t going to happen overnight. This will have to be built on incrementally with continuous reinforcement by the firm’s leaders.
PIMFA Free Webinar: SDR & Investment Labels: How can firms prepare for upcoming ESG regulation?
With the Financial Conduct Authority (FCA) imminently publishing its final policy paper on sustainable investment product labelling, we take a look at how this might impact the wealth and advice industry and how firms can manage an ever-growing ESG regulatory agenda.
Please join our PIMFA-hosted panel discussion, on 26 September between midday at 1pm, to gain insights from leading industry representatives, as well as experts from Alpha FMC, a leading management consultancy for the wealth & asset management industry.
To book your place, click here
FCA publishes updates on Big Tech and AI
The FCA has published a feedback statement to DP22/5, setting out three key next steps on its work to develop an effective competition approach for Big Tech firms in financial services, It will:
1. Launch a ‘Call for Input’ on Big Techs as ‘gatekeepers’ and key drivers including the role of data sharing asymmetry between Big Tech firms and financial services firms by the end of 2023.
2. Review their supervisory approach to Big Tech firms
3. Continue working with the Government and the Digital Markets Unit (DMU) as the Digital Markets, Competition and Consumers Bill passes through Parliament.
It will also continue progressing their ongoing market design policy initiatives, which aim to enable innovation and effective competition in digital markets. This includes their work on open banking & open finance, investigating digital consumer journeys and developing regulatory approaches for artificial intelligence (AI) and critical third parties.
The full Feedback Statement can be read here
FCA views on AI and Big Tech
Nikhil Rathi recently gave a speech on the use of AI and Big Tech within the financial services framework.
Of particular interest were remarks about the potential for AI to provide “hyper-personalised” products and deliver more accurate information to everyday investors who may not afford bespoke advice. This is particularly interesting in the context of the FCA’s ongoing review of the Advice Guidance boundary.
While the FCA does not regulate technology, its regulatory focus is on the effect and use of technology in financial services. The Bank of England, the FCA and the PRA will be regulating critical third parties setting standards for their services including AI services to the UK financial sector. The FCA has also invited the industry to work with it through its upcoming AI Sandbox.
To read the speech in full, please visit the FCA website.
FCA Engagement Paper 5: The Public Offer Platform
The FCA has published its fifth engagement paper in the series for a new regime replacing the UK prospectus regime. The new regime will allow FCA to set specific rules for types of public offers of securities that are not admitted to a public market.
Following the Gloster report, the FCA’s regulatory approach will reflect that offers made via Public Offer Platforms are largely directed at retail investors, and that the new framework extends to non-transferable debt securities – this was a point that PIMFA were particularly keen to address in our initial feedback to the government’s work on NTDS in 2021. At the same time, the FCA is also keen to see what type of professional investor may be envisaged by companies seeking capital beyond “seed” funding.
The proposed regime will impose requirements to ensure platform operators undertake appropriate due diligence on companies and prospective offers and that investors are clear about the due diligence that has been undertaken and the risks that remain. PIMFA will respond to this engagement paper, and members should contact Simon Harrington should they have any input.
The engagement paper can be accessed here.
PIMFA Regulatory Forum: 18th July, 3pm-4pm
This monthly forum provides updates on regulatory hot topics from the PIMFA team and select associates, provides an opportunity to share best practice and get the latest intelligence on policy matters. Topics will include:
• Mansion House Reforms
• UK-EU MoU on Financial Services Cooperation
• International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards
• HMT Investment Research Review (IRR) Recommendations
• Briefing on PRIIPs
• Consumer Duty Update, inc. PIMFA member guide and data frameworks
• Digitalisation Taskforce - Interim Report
Attendance of the PIMFA Forums is open to any representatives from Member and Associate firms. If you or any of your colleagues would like to attend next week’s or future forums, please email Heidi Bryant
City of London Corporation Annual State of the Sector report 2023
The City of London Corporation has launched the second edition of their annual State of the sector report, in partnership with HM Treasury. The report provides a robust assessment of UK financial services performance and attractiveness, and highlights areas of opportunity identified by the industry.
The financial and professional services industry is the engine room driving UK growth. With 2.5 million people employed across the UK, over 1.1 million in financial services and more than 1.3 million in related professional services, the industry produced £278bn of economic output, 12% of the entire UK’s economic output, and £100bn in tax revenue. The UK is a world leader in many areas of the financial industry –banking, insurance, asset management – but global competition means the UK must continue to strive.
PIMFA Index Series Questionnaire
PIMFA would like to gain a deeper understanding of how your firm is using the PIMFA Index Series, so
we have constructed a brief questionnaire, featuring mainly multiple-choice responses, which should take no more than 5-7minutes to complete.
To access the survey, simply click here or scan the QR code below using your mobile device. Your response is important to us and we very much appreciate the time taken to provide this information.
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PIMFA COMPLIANCE CONFERENCE
Hear from leading industry experts on the key issues facing compliance professionals in the investment management and financial advice world.
Bringing together a high-level audience who can engage with the experts, this conference will facilitate fruitful discussions with opportunity for questions and networking.
PIMFA WEBINAR: CONSUMER DUTY: THE FINAL COUNTDOWN
In this webinar, PIMFA associate member firm, Bovill, reviews the regulator’s questions and explains the steps firms can still take to identify and act on areas to help demonstrate the delivery of good customer outcomes.
