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PIMFA WEEKLY NEWS BULLETIN 18 December 2023
We are delighted to share the 2023 PIMFA Under 40 Leadership Committee (U40LC) Report. The U40LC is an exciting initiative that brings together talented people from across our member firms. These future industry leaders work together in a dedicated community to learn and collaborate with their peers, and also to conduct primary research focusing on current hot topics impacting us all across our industry. Their work contributes to the strategic thinking of PIMFA and has been operating in one form or another for over seven years – creating a plethora of useful insights and research.
This years cohort investigated a range of fascinating topics: •
How to make the wealth management industry more accessible to females
•
The great wealth transfer and inheritance conversations
•
The impact of ‘finfluencers’ and the role of social media
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How to make long term investment more attractive and trending
Download the full report for free here.
PIMFA Advice Guidance Working Group The first PIMFA Advice Guidance Working Group to discuss the FCA and HMT’s recent proposals will take place on 9th January 2024 at 10.30 to 12. If you are from a member firms and wish to attend, please contact Simon Harrington.
CP 23/24 Capital Deduction for Redress – Personal Investment Firms PIMFA will be responding to the FCA’s consultation setting out proposals for personal investment firms (PIFs) to set aside capital for potential redress liabilities at an early stage (CP 23/24 Capital Deduction for Redress – Personal Investment Firms). The FCA is also considering wider potential reform of the prudential regime for PIFs further down the line. If you are a member and work within a personal investment firm to which this consultation applies, please get in touch as we are very interested to hear your views and feedback. We will be holding a working group to discuss the consultation in early January. If you are interested in joining this or would just like to feed in your views, please get in touch with Alex Roberts.
FCA Report on Future of Consumer Investment
The FCA has published a report setting out some common aims for its forthcoming consumer investment policy initiatives. Those aims are a continuation of the vision and goals previously set out in the Consumer Investments Strategy as follows: •
Ensuring access to affordable advice.
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Ensuring access to a broad range of investments across the spectrum of risk.
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Developing regulation to support consumers to distinguish between legitimate investment risk and fraudulent products.
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Ensuring consumers receive clear and timely communication.
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Replacing the PRIIPs and developing a public offer platform regime.
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Ensuring that firms are proactively identifying where something has gone wrong, and consumers have suffered harm.
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Ensuring that firms are meeting liabilities and putting consumers back into the position they should be in.
The full report can be accessed on the FCA website. The report is accompanied by two other publications: the Consumer Investments Data Review April 2022 - March 2023, and the Consumer Investments Strategy - 2 Year Update.
Did you miss the PIMFA webinar - Get up to date on the SDR and Investment Labels Final Rules and Guidance? This webinar bought our members up to date in the Sustainability Disclosure Requirements and Investment labels regime which aims to help consumers navigate the market for sustainable investment products. The rules introduce: •
An anti-greenwashing rule for all FCA-authorised firms. The FCA is also consulting on supporting guidance.
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Naming and marketing rules for investment products, to ensure the use of sustainability-related terms is accurate.
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Four labels to help consumers navigate the investment product landscape and enhance consumer trust.
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Consumer-facing information to provide consumers with more accessible information.
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Detailed information targeted at institutional investors and consumers seeking more information in pre-contractual, ongoing product-level, and entity-level disclosures.
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Requirements for distributors to ensure that product-level information (including the labels) is made available to consumers.
Catch up now and watch the event here.
FCA Welcomes the Launch of Industry Code of Conduct for ESG Ratings and Data Products Providers The International Capital Market Association (ICMA) and the International Regulatory Strategy Group (IRSG) have launched a voluntary code of conduct for Environmental, Social and Governance (ESG) ratings and data products providers. The code is owned and maintained by the ICMA. The FCA, the Treasury and other national and international financial regulators acted as observers as the code was agreed. In line with IOSCO’s recommendations, the code focuses on promoting transparency, good governance, management of conflicts of interest, and strengthening systems and controls in the sector. Sacha Sadan, FCA Director of ESG, said: "With its strong focus on international consistency, this industry-owned code will play a key role in increasing transparency and trust in the ESG data and ratings market. We encourage all ESG data and ratings providers to engage with and sign up to the code". In the first half of 2023, the UK government consulted on whether and how the FCA’s regulatory perimeter should be extended to include ESG ratings providers. The FCA continues to work closely with the government as it considers its next steps.
FCA Feedback Report on Engagement Papers The FCA has published a feedback report on the six engagement papers published earlier this year on the new Public Offers and Admissions to Trading regime. As for next step, the FCA aims to consult on proposals in summer 2024, which will include draft rules and cost benefit analysis. Subject to consultation responses and final approval by the FCA Board, the FCA will seek to make final rules in H1 2025. To read the feedback report, please visit the FCA website.
Draft Statutory Instrument - Public Offers and Admissions to Trading Regulations A draft of the Public Offers and Admissions to Trading Regulations has been laid before Parliament to replace the EU derived Prospectus Regulation and create the framework for a new UK regime. Key points include: •
Prospectuses will remain a key feature of an IPO in the UK.
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The FCA will be given discretion to determine when a prospectus is required but, for a listed issuer, a public offer to its existing shareholders will not of itself require a prospectus.
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The overarching requirement for a prospectus to contain ‘necessary information’ will be retained, but the FCA will be given power to make rules on the detailed disclosure requirements.
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Liability for forward-looking information in a prospectus will be aligned with liability for other listed company published information (liability will only be incurred when those involved are reckless).
The FCA is expected to publish a formal consultation on the detailed rules in H1 2024, and the new regime will come into force after the FCA has completed the consultation exercise. To read the draft SI, please visit the Government's legislation website.
ThoughtLab Group - Wealth Management Megatrends Study We have been approached by the ThoughtLab Group, who are conducting a Wealth Management 'Megatrends' study. Some PIMFA members may remember responding to an earlier version of this study a couple of years ago. ThoughtLab are looking for the views of industry experts on the major trends in wealth management today and plan to use this information to produce a Q&A article for publication on their website, as well as an eBook containing the survey results. For reference, here is a link to a similar Q&A article they published during their last wealth survey. If you would be interested in contributing to this survey, please contact Mike Cahill at PIMFA
Money Laundering and Terrorist Financing (Amendment) Regulations 2023 (domestic politically exposed persons) On 14 December 2023 HM Government published Statutory instrument 2023 No. 1371 (SI). The SI amends the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs) so as to clarify the explicit differences between domestic and non-domestic politically exposed persons (PEPs). The SI clarifies that for the purposes of assessments under regulation 35(3) of the MLRs, where the customer is a domestic PEP, or a family member or known close associate of a domestic PEP, the starting point for the assessment is that the customer presents a lower level of risk than a non-domestic PEP. The extent of enhanced customer due diligence measures to be applied in relation to that customer should be less than for non-domestic PEPs, unless enhanced risk factors apply. The SI comes into effect on 10 January 2024
Retained Interest on Client Cash An FCA Dear CEO letter to investment platforms and SIPP operators outlines significant concerns about firms' practices for retaining interest earned on client cash balances. As well as querying whether these practices are consistent with Consumer Duty outcomes, the FCA makes clear that it expects "double dipping" (where firms both retain interest and levy an account charge or fee on cash holdings) to end. While the Dear CEO letter is specifically addressed to platforms and SIPP operators, it makes clear that: "Other consumer investment firms with comparable business models who hold uninvested cash that belongs to retail customers should also consider the expectations set out in this letter and take appropriate action."
OFSI Annual Review 2022 to 2023: Strengthening our Sanctions The Office of Financial Sanctions Implementation (OFSI) have published their annual review noting that, with the cooperation and engagement of international partners and the private sector, UK financial sanctions are now better understood and more effective. OFSI also noted
the management and mitigation of unintended consequences has been substantially improved. OFSI stated the expectation (medium-term outlook) is for continued intensity for financial sanctions and advised of their intention to strengthen their sanctions regimes, implementation and capability. In the report OFSI also stated the importance of industry and international partnerships to strengthen capability and to help guarantee that financial sanctions are properly understood, implemented and enforced in the UK and globally. The report covers: •
New Ransomware Sanctions
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Consolidated List
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Reporting and Information Sharing
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Strict Civil Liability
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Enforcement Capability
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Mitigating Unintended Consequences
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The Annual Frozen Asset Review
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Licensing
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Penalties
Read the full review here.
FCA Retail Banking Consumer Duty Multi-firm Review The FCA has published a multi-firm review looking at the actions firms had taken for customers in financial difficulty, dealing with bank accounts of deceased or incapacitated customers, fraud and security breaches, business current accounts and/or mortgages for debt consolidation. In the publication, the FCA expect all firms to evaluate their products, services and processes against the Duty rules and guidance on an ongoing basis to allow them to put consumers at the heart of their business and deliver good outcomes for customers. Firms who identify gaps against the FCA expectations should take appropriate action to address these. The FCA also remind firms that their Board must, at least annually, review and approve an assessment of whether the firm is delivering good outcomes for its customers which are consistent with the Duty. At the same time, firms should expect the FCA to ask for the results of their monitoring and their Board reports. To read the review report, please visit the FCA website.
PRESS RELEASES
PRESS COVERAGE
PIMFA’s Under 40 Leadership
FTAdviser: How marketing to woman
Committee report reveals need for
represents £36bn opportunity
advice industry to focus on the future TheWealthNet: Finfluencers' PIMFA welcomes the Financial
recommendations impacting financial
Conduct Authority’s proposals for
decisions - research
improving financial advice to
Professional Paraplanner: FCA
consumers
advice/guidance review next stageindustry reactions
PIMFA welcomes FCA proposals for Sustainability Disclosure
Professional Adviser: Why your
Requirements
business needs to support and retain female clients
PIMFA to work with FCA on proposed ‘polluter pays’ model for
READ MORE
personal investment firms
READ MORE
PIMFA EVENTS & LEARNING
25 January 2024
28 February 2024
Webinar | 11:00 - 12:00 | Free
Conference | 10:00 - 18:00 | Early-bird discount available until 22nd
Climate Change And Financial Crime:
December 2023
A Vicious Cycle Shoosmiths, 1 Bow Churchyard, London EC4M
Join financial crime platform Themis as they
9DQ
take you through the links between financial crime and climate change, demonstrating why
Consumer Duty Conference
the ‘S’ and the ‘G’ of ESG are just as important
The Consumer Duty is one of the most
for firms’ climate change efforts as the ‘E’.
significant regulatory initiatives in recent years with the FCA considering it a major step
In this FREE 60-minute webinar, we look at
change for financial services, requiring firms to
how financial crime harms the environment and
make lasting changes to culture and behaviour
contributes to climate change, and how, in a
to consistently deliver good outcomes.
vicious cycle, climate change is further fuelling Following the success of 2023’s conference,
financial crime worldwide.
we will be reconvening to consider the state of We also discuss how firms can help reduce
play after seven months of the Duty – where
their carbon footprint and damaging
implementation has worked well, where the
environmental impacts through their anti-
sector still has work to do, and how much of a
financial crime efforts; for example, through
tangible impact has been made on living up to
adequate supply chain risk assessment,
the ideals aspired to by the regulatory impetus.
customer due diligence and responsible
The conference will look into how firms have
investment.
reviewed their product suite, communications and end-to-end customer journey, and how
This webinar will help you understand:
changes have been made in areas such as •
•
•
The links between financial crime and
governance, MI and reporting, product design,
climate change
pricing, distribution, servicing and staff training. Register to hear from key industry experts on
Why tackling financial crime is just as
the key themes of consumer duty. We
important for the ‘E’ as the ‘S’ and the
welcomed a high-level audience who engaged
‘G’ in ESG
with the experts, to facilitate fruitful discussions
Some of the ways you can address climate change and your carbon footprint through anti-financial crime efforts
with opportunity for questions and networking. This event sold out in 2023 and is likely to sell out again, so early booking is highly recommended.
BOOK NOW
BOOK NOW
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