Featured: Highlights from the Chancellor of the Exchequer's first Mansion House speech
18 November 2024
Chancellor delivers Mansion House speech
The Chancellor of the Exchequer Rachel Reeves delivered her first Mansion House speech on the evening of Thursday 14 November 2024, in it, she:
• Emphasised the importance of growth and competitiveness in the financial services sector, highlighting the sector's role as a "crown jewel" of the UK economy.
• Announced plans to focus on private investment, sustainable finance, and asset management.
• Reiterated the government's commitment to regulatory reform, aiming to make the financial sector more dynamic and reduce administrative burdens.
• Outlined the creation of "mega funds" from pension funds to drive economic growth. These will be legislated for in 2025 through the Pensions Schemes Bill.
• Set out the government’s agenda to enhance operational resilience and support innovation in the financial services.
Call for Input: Modernising the Redress System
Following the speech, the Financial Conduct Authority (FCA) and the Financial Ombudsman Scheme (FOS) have published a joint call for input. This call for input seeks views on:
• The problems that mass redress events and the redress scheme cause firms, consumers and their representatives.
• What changes could be made to the redress framework to help the FOS and the FCA better identify and manage mass redress events to ensure better outcomes for consumers and firms.
• What changes could be made to how the FOS and the FCA work together to ensure their views on regulatory requirements are consistent.
We believe that this is an excellent opportunity to look further at the current redress regime but, in particular, look at further strengthening the regulatory regime as it applies to Claims Management Companies (CMCs). Please contact Simon Harrington to discuss this paper further.
Advice Guidance Boundary Review
Also contained within the speech was the Government’s commitment to progressing the Advice Guidance Boundary Review. The FCA have subsequently set out its proposed next steps in progressing the Advice Guidance Boundary Review. The FCA have confirmed its intention to consult on high level proposals (i.e. without rules) for targeted support in pensions. Following this consultation there will be an additional consultation in 2025 on the application of targeted support in retail investments.
The FCA have also published a statement with The Pensions Regulator and the Information Commissioner’s Office, giving firms greater clarity on communications they can make to help pensions and retail investment customers.
MSCI PIMFA Index Series
New asset allocations effective on 26.11.2024
The PIMFA Indices Committee met recently and agreed changes to the portfolio weights of the MSCI PIMFA Index Series’.
These changes will become effective Tuesday 26th November 2024.
To view the decisions taken for the MSCI PIMFA Private Investor Index Series, click here.
To view the decisions taken for the MSCI PIMFA Equity Risk Index Series, click here.
Customer Vulnerability
In October PIMFA published and launched updated guidance for firms on Understanding Customer Vulnerability at an industry event hosted by PIMFA Associate Member RSM and with support from the FCA. you can find out more in our press release here.
FREE RESOURCES
Event Summary of key points from the discussions
Live recordings from each session on the day (agenda below)
• Welcome Remarks: Paul Geddes, CEO, Evelyn Partners
• An Introduction to the Guidance: Alexandra Roberts, Head of Regulatory Policy & Compliance, PIMFA
• Panel Discussion: A view from the top - the importance of getting it right: Liz Field, Chief Executive, PIMFA (chair), Stuart Dodson, Managing Director, The Openwork
Partnership; Sarah Owen-Jones, Chief Risk Officer, Rathbones & Richard Flynn, Managing Director, Charles Schwab
• Panel Discussion: Practitioners perspectives on compliance and implementation: Zoe Morton, Director, RSM (chair); Tracy Coghill, Client Experience Manager, City Asset Management; Trisha Horncastle, Compliance Technical Manager, Abrdn & David Mulholland, Regional Business Development Director – North, Brooks Macdonald
New PIMFA Guest Blog: "I Want to Break Free" (from Operational Complexity): Building Scalable Wealth Management Operations for Growth
Just as Freddie Mercury sang of ridding himself from constraints, today’s wealth managers are being driven to shed operational burdens, streamline processes and rethink their operating models. Here Tariq Khan, Head of Sales and Business Development for Objectway, discussed how firms can "break free".
Read the full blog here.
Financial Stability Board report on global stability implications of AI
On 14 November 2024, the Financial Stability Board issued a report on the financial stability implications of artificial intelligence (AI).
The publication provides a high-level overview of recent developments in AI, along with an assessment of their potential financial stability implications.
The report makes a number of observations including:
• The use of AI in financial services could amplify certain financial vulnerabilities with potential implications for financial stability.
• Financial authorities face two key challenges for effective vulnerabilities surveillance: the speed of AI change and the lack of data on AI usage in the financial sector. Some authorities have adopted or are considering AI-specific guidance to address issues that may go beyond the scope of existing regulations.
Future regulatory regime for Environmental, Social and Governance (ESG) ratings providers
Following its consultation on a future regulatory regime for ESG ratings providers (published on 30 March 2023), the government has published its consultation response and the draft legislation, which will bring ESG ratings providers into regulation. HM Treasury (HMT) confirmed that the overall tone of responses received was positive, with a preference from respondents for regulatory alignment with the recommendations set out by International Organization of Securities Commissions (IOSCO).
The government intends to introduce secondary legislation to amend and expand the regulatory perimeter to capture the activity of providing ESG ratings, including ratings produced in the UK and ratings produced overseas which are made available to UK users by way of a business relationship.
The FCA will consult on draft rules and guidance for ESG ratings providers. As part of the design of the future regulatory framework for ESG ratings provision, the FCA is considering its approach to overseas ESG ratings providers applying for UK authorisation. The overall process of designing, developing and commencing the ESG ratings regulatory regime is expected to take approximately four years, with the government aiming to lay the requisite secondary legislation before Parliament in early 2025. Following this, the FCA will develop and consult on policy proposals, building in feedback to finalise the ESG ratings regime. Affected firms will then go through the authorisations process, with the regime ultimately going live at the end of the authorisation gateway.
FCA Policy Statement (PS) 24/16 (PRA Policy Statement 16/24) Operational resilience: Critical third parties to the UK financial sector
The FCA, jointly with the Prudential Regulation Authority (PRA) and the Bank of England (the Bank), has published the final requirements and expectations for critical third parties (CTPs).
The final rules for CTPs will take effect from 1 January 2025
The regulators may recommend third parties to HMT for designation. However, HMT takes the decision to designate.
Market participants impacted by the changes are advised to read the PS and the final rules:
• The new CTP sourcebook and related enforcement rules should be read along with the policy statement to gain a full understanding of the final rules.
• An approach to oversight document provides guidance on how regulators will oversee CTPs in practice.
Read the full policy statement here.
Data (use and access) Bill 2024
The Data (Use and access) Bill 2024 has recently been introduced to Parliament (House of Lords) with proposals for a package of data protection and e-privacy reforms. The Bill also covers data sharing and digital verification schemes.
Access the Bill here
The Financial Reporting Council (FRC) launches consultation on updates to UK Stewardship Code
On 11 November the FRC launched its consultation on significant updates to the UK Stewardship Code, focusing on supporting economic growth and investment and delivering increased transparency for millions of UK investors, savers and pensioners. The FRC also wants to streamline reporting requirements and reduce burdens for signatories and ensure a clearer focus on the purpose of Stewardship and the outcomes that it delivers.
While the Code is voluntary, it has raised standards and driven best practice globally as part of a comprehensive regulatory framework, working alongside the FCA's oversight of financial markets, the Pensions Regulator's protection of member interests, and the Department for Work and Pensions (DWP) pension scheme regulations. The consultation runs until 19 February 2025 and follows extensive engagement with over 1,500 stakeholders during 2024 and reflects four years of analysis of reporting against the 2020 Code.
Key proposals in the consultation include:
• A revised and enhanced definition of stewardship that emphasises the need to create long-term sustainable value for clients and beneficiaries as a key outcome of good stewardship
• A streamlined reporting process separating policy and activity disclosures to reduce reporting burdens
• Targeted principles for different types of signatories and service providers, including for the first time, a dedicated Principle for proxy advisors
• New guidance to support effective implementation and help signatories with the transition to the new reporting arrangements.
The full consultation can be found here.
FCA: Bank fined for financial crime systems and controls failings
The FCA has fined Metro Bank for financial crime systems and controls failures for money laundering risks in breach of Principle 3 (Management and control) of the Principles for Businesses.
• Since the firm’s identification of the issues with its transaction monitoring system in April 2019, Metro has put in place processes to remediate the issues identified.
• The FCA continues to supervise firms to ensure that they have the right systems and controls to manage financial crime risks.
Read the press release here
HM Treasury (HMT): Memorandum of Understanding with regulators on CTP regime
HMT has signed a Memorandum of Understanding (MoU) with the FCA, Prudential Regulation Authority and Bank of England.
The MoU enables the establishment of a joint CTP Consultation and Coordination Forum, through which the regulators will co-ordinate their CTP functions.
The Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2024 have been made and will come into force on 16 December 2024.
The amendment will ensure Gibraltar authorised financial services firms will be able to continue providing cross-border services and establishing branches in the UK, and facilitate the access by similar types of UK-based firms to Gibraltar’s financial services market for a further 12 months.
Access the Statutory Instrument here
PRESS RELEASES
Budget changes will be hard felt by retail investors and the Government must now prioritise stability to build investor confidence
PIMFA celebrates winners of its 2024 Diversity & Inclusion Awards
PIMFA welcomes 600 professionals at launch of customer vulnerability guide
PRESS COVERAGE
Citywire New Model Adviser: Claims firms face £250 fee to make FOS complaints
Professional Adviser: Vulnerability taboos deterring clients from seeking additional adviser support
Investment Week: Industry reaches Consumer Duty stalemate and calls for FCA to provide further clarity on cost disclosure reforms
PIMFA LEARNING AND EVENTS
THIS WEEK
20 November 2024
Live Online | 09:30 - 12:30
£400 - £500
PIMFA Live Online Learning: Mastering Your Ongoing Compliance with Consumer Duty
The FCA review of Consumer Duty implementation within payment firms published in October 2024 pulls no punches.
The review of 23 firm found that just over half were satisfactory, while nearly half were categorised as needing “significant work” to meet the Duty’s requirements.
In yet another reminder, the FCA expects your firm to identify gaps in your compliance with the Duty and “act immediately, putting plans in place to address shortcomings.”
EARLY-BIRD TICKETS
26 February 2025
Live Event and Online| 10:00 - 17:00
£250 - £600
We are delighted to announce the return of the PIMFA Financial Crime Conference 2025.
The world is changing quickly and the pace of criminals and threat actors targeting our sector has not slowed. This event will be dedicated towards giving attendees the information they need to protect themselves and their clients to stay ahead of those with malicious and harmful intent.
PIMFA Financial Crime Conference 2025
In this live, tutor-led online training masterclass, led by consultancy firm Square 4, our tutors help you:
• Demonstrate that the FCA’s latest guidance has been considered
• Identifying gaps, shortfalls, and actions required to evidence that your firm is meeting their ongoing obligations with the Duty.
By attending this masterclass you will be confident to provide robust evidence of an approach to delivering good outcomes should the FCA review your activities in the future.
To reserve your place on this masterclass and bring your colleague along for free click here.
Join us at the offices of Shoosmiths in London, for our our annual one-day conference exclusively for compliance experts, financial crime specialists, and financial advisors, and will feature the following:
Headline updates from the industry:
• Keynote speech from the FCA on regulatory priorities for 2025 in the FinCrime space
• Keynote address from the Homeland Security Group at the Home Office, on the latest updates to the ongoing Economic Crime Plan 2
• Special session from the National Economic Crime Command (NECC) at the National Crime Agency (NCA) on SARS
• Legal update on what firms need to know within fraud and regulatory for 2025, featuring hosts Shoosmiths LLP
More to be announced!
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