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PIMFA WEEKLY NEWS BULLETIN | 2 November 2020
Dear Nigel, Welcome to the PIMFA Bulletin, grab a coffee and take 10 minutes to read this week's latest industry news effecting you and your firm.
LATEST NEWS
Brexit Negotiations
Current Asset Allocation changes to the MSCI PIMFA Private Investor Index Series
After a week of the UK–EU Brexit talks in London, the two negotiating teams have moved to Brussels to continue to hammer out the details of the future free trade agreement. The talks are now in the most difficult stage and no one is prepared to
The PIMFA Indices committee has made changes to the index weights of the Balanced and Growth portfolios of the MSCI PIMFA Private Investor Index Series. Changes will be effective from Tuesday 1st December 2020.
make any predictions. The negotiations have effectively been in a so-called
Click here for further details.
‘tunnel’ for a week and both the UK and EU are refraining from commenting at this delicate stage.
Brexit: Equivalence
Some progress has been reported on the governance issue as well as on the level
According to John Berrigan, Director
playing field and state aid but there is no
General of FISMA, the European
progress on fisheries as yet. The next two
Commission’s financial services
to three weeks will be crucial as any deal
department, the EU is “almost ready” to
will have to be agreed by mid November
decide which UK financial services can be
to allow the European Parliament to ratify
recognized as equivalent. Speaking to the
it in time for the end of the Brexit transition
European Parliament’s ECON Committee
period on 31 December 2020.
on 27 October, Berrigan said the Commission still needs more information on how the UK intends to diverge from the
UK – India Economic and Financial Dialogue
EU rules in the future, stating “it’s not about equivalence today, it’s about equivalence going forward.”
He went on to say that relations between On 28 October 2020 the Chancellor Rishi
the UK and EU will be more intense than
Sunak and Indian Finance Minister
between the EU and any other third
Nirmala Sitharaman concluded the
country so both sides need to identify
landmark 10th UK-India Economic and
issues before they become a problem to
Financial Dialogue. They reached a
maintaining equivalence.
number of agreements to deepen the
Berrigan accepted there will be
economic relationship – focusing on
divergence on the UK side, as well as
financial services, infrastructure and
probably on the part of the EU, but the two
sustainable finance. During the talks, the
sides need to understand which level of
Chancellor championed measures to help
divergence will be too much to hold
the UK financial services industry win
equivalence. While the UK – EU
more business in India and welcomed the
negotiations will not impact the financial
decision to allow Indian companies to list
services sector, he acknowledged that
on the London Stock Exchange – the UK
cooperation will be more challenging
being one of only seven jurisdictions
without a deal.
permitted.
IMF Mission Findings STO at the end of the Brexit transition period The International Monetary Fund projects that the UK economy will contract by On 26 October, ESMA issued a public
10.4% in 2020, recovering partially in
statement to remind market participants of
2021 with growth at 5.7%, in both cases
the application of the EU trading obligation
downwardly revised from the last forecast.
for shares (STO) as of 1 January 2021, after the end of the transition period
The IMF’s report, published this week,
provided for in the Withdrawal Agreement.
says that reduced capital accumulation, persistent unemployment and lower
ESMA clarified the scope of the share
productivity growth will hold GDP 3-6%
trading obligation which requires that
below its pre-pandemic trend through the
publicly listed stocks change hands only
medium-term. Inflation is expected to
on regulated and recognised venues. The
climb to the 2% target only gradually, as
UK trading platforms, including the
compressed demand and rising
London Stock Exchange, will not be
unemployment muffle production cost
formally recognised at the end of the
increases. Projections are, however,
Brexit transition period. ESMA explained
subject to unusually high uncertainty, and
that sterling-denominated trades of EU-
downside risks related to a prolonged
listed shares taking place on UK venues
Covid-19 impact and a no-deal Brexit
should not be caught by the requirement
could bring more persistent
as the trade occurs on a “non-systematic,
unemployment and corporate balance
ad-hoc, irregular and infrequent basis”.
sheet stress. The pandemic has taken a
Therefore, it is expected that those trades
significant human toll in the UK. It hit an
will not be subject to the EU STO, in
economy already facing strains from
accordance with Article 23 of MiFIR.
Brexit and longer-term challenges.
The authorities’ aggressive policy Latest PIMFA
response, one of the best examples of
Consultation Response
coordinated action globally, has helped mitigate the damage, holding down
PIMFA’s latest consultation response is
unemployment and insolvencies. The
to HM Treasury on the Regulatory
IMF’s Managing Director Kristalina
Framework for the Approval of
Georgieva said the UK had the “policy
Financial Promotions
space” to step up economic aid to levels comparable to other EU countries. She
Read this and all of our other PIMFA
also praised the country’s “global
consultation papers here.
leadership” on finding a vaccine, increasing IMF funding and advocating debt relief for poorer countries.
Latest PIMFA Blogs & Press Releases
PIMFA calls for the approval of unregulated financial promotions to be a regulated activity PIMFA welcomes first reading of Financial Services Bill Rising Professional Indemnity Insurance premiums present advice industry with an existential threat PIMFA urges Regulator to work more closely with industry to rebuild levels of trust in fair FSCS outcomes PIMFA welcomes FCA analysis of regulatory perimeter but calls for swifter action to protect consumers
EVENTS & LEARNING
PIMFA Online Learning Authentic Leadership: How to thrive as a female leader in wealth and finance 24 November Early Bird Fee: £2,500 member | £3,000 non-members
Break through the barriers and get what you want from your career. This six month programme is for any woman seeking to reach her true leadership potential and for anyone — man or woman — looking to create a more gender-balanced workforce. Find out more about this ground breaking programme here.
PIMFA Training Getting the DB Pension transfer advice process right 24 November
In this online session we will help you: •
Understand what’s going wrong with DB pension advice, and how you can get it right
•
Grasp the FCA’s expectations as to how to act and treat customers
•
Identify weaknesses and poor practices in your existing advice process
•
Learn how to test whether your DB pension transfer advice is likely to stand up to FCA scrutiny
•
Receive tips on how to ensure you capture the right “know your customer” information from clients
•
Recognise how you can improve (and shorten!) your suitability reports
For more info and to book your place, please click here. PIMFA Online Conference Virtual Fest V2 27- 28 January 2021 Following on from the HUGE success of the inaugural PIMFA Virtual Fest in June 2020, we are proud to announce that bookings are now open for Virtual Fest V2. Taking place over two days (27 & 28 January 2021) the event will deliver presentations on key areas which members have identified as their key short- and long-term focus including: • Compliance • Risk and Resilience • ESG and Impact Investing • Cyber Resilience • and others A 50% early-bird discount is available to all PIMFA members if you book by October 31st For more info and to book your place please click here
The PIMFA ESG Academy, supported by Morningstar, is definitely NOT your traditional online class! As you learn at your own pace and in your own time, you will have access to an evergreen library of ESG content that you can engage and interact with on your tablet, computer and mobile – all FREE for PIMFA members! The Academy was launched following growing demands by advisers for an immersive, engaging, CPD-approved learning experience that supports them in making the most of the growing ESG opportunity - find out more here.
WHAT'S HAPPENING IN OUR INDUSTRY
Brexit and PIMFA Members' Preparedness
The UK is due to exit the EU Single Market when the Brexit transition period ends on 31 December 2020. The negotiations on the terms of the future relationship between the UK and EU are ongoing but regardless of the outcome of the talks, firms with an EU footprint will need to adjust to operating from a third country in relation to the EU and decide how to access and operate on behalf of clients living in the EU. Retail financial services firms cannot rely on a pan-European set of rules for servicing customers in the EU and, with passporting lost and no equivalence available in the retail investment sector, the options for PIMFA firms to continue cross-border trade with the EU are limited and mostly
dependent on the approaches adopted by national regulators in the EU Member States. The rules that Member States will apply to cross- border trade post Brexit are mostly third country rules, not specific Brexit rules. The FCA advises firms in the retail financial services sector who wish to continue to serve clients in the EU to speak to local regulators and ensure they understand the national regulator’s approach and the impact it will have on their business post Brexit transition.
Legal Advice? We would like to hear from firms if they would like to obtain legal advice from a law firm on options available to them for servicing clients in the EU once the UK has left after the Brexit transition period on 31 December 2020. The cost of such advice would be shared among firms participating in the project. At this stage we would be grateful if you could indicate your interest to us by emailing Maja Erceg.
Partner Event - Morningstar Investment Conference 16-17 November
The all-digital Morningstar Investment Conference (16-17 November) offers a unique opportunity to watch the great content on the UK agenda, from wherever you are. Register for free today
There will be a big focus on ESG, including Holly Mackay’s ‘Seven Sustainable Investor Tribes’ and founder of Sustainalytics, a Morningstar company, Michael Jantzi, who will talk about why ‘now’ is the time for sustainable investing. We’ll also feature sessions from the likes of Carl Richards, creator of The Behavior Gap, and Morningstar's Mike Coop, Head of Multi Asset Portfolios, looking at new
strategies that advisers can adopt to help investors win.
Plus, registering for the UK edition of the Morningstar Investment Conference gives attendees on demand access to ALL of Morningstar's conferences from around the world via the same event platform until 1 December.
FCA: SM&CR submissions
Dual regulated firms must have submitted their Directory Persons data on the FCA’s Connect system by the deadline of 13 November 2020. From November 23, 2020, the FCA will publish and maintain dual regulated firms’ Directory persons data as it is submitted. The data will be published on the Financial Services Register.
Solo-regulated firms have to submit their Directory Persons data via Connect by the deadline of 31 March 2021 using the single entry submission form. Earlier dates apply if a firm wishes to use the multiple entry submission form and/or if they wish their data to appear from earlier dates starting in December.
The FCA will start to incrementally display data from solo-regulated firms as it is submitted - that data will start to be published from 14 December 2020. The last date for single entry submissions to appear from the outset of this publication is 9 December 2020.
The FCA is keen to ensure firms are getting all the help they need and, while firms are dealing with the challenges of Covid, it is also important to keep on track with BAU issues like SM&CR.
Further information is available on the SM&CR section of the FCA website.
Re-issued: FCA Covid-19 Impact Survey
The FCA issued the first phase of the COVID-19 impact survey in June, covering around 13,000 firms across 15 Supervision portfolios (Tranche 1), and then rolled this out to a further 9,500 firms in 21 portfolios (Tranche 2) at the beginning of August. The survey is helping them obtain a more accurate view of the impact of COVID-19 and supports their work to mitigate risks of harm to consumers, the market and competition within it. As advised previously, they repeated this survey for Tranche 1 to understand the change in firms’ financial positions with time, and are now doing the same for Tranche 2.
FCA are planning to send this survey to the relevant firms in Tranche 1, some of which may be PIMFA members, on one of the following dates: Batch 1: to be sent on 3 Nov - response due by 27 Nov Batch 2: to be sent on 5 Nov - response due by 1 Dec Batch 3: to be sent on 6 Nov - response due by 2 Dec Batch 4: to be sent on 10 Nov - response due by 4 Dec
They are including an extra two questions to cover the potential impact of Brexit, as the end of the transition period is nearing. Therefore, this repeat survey will include 12 questions in total, designed to give us information about the following important areas: •
Liquidity/ cash availability and needs
•
Recent financial performance
•
Scale of business activity
•
Access to government schemes
•
Impact of Brexit
Completion of the survey is mandatory under section 165 of the Financial Services & Markets Act (FSMA) 2000. The FCA may exercise their powers under FSMA for firms who do not respond. They have designed this survey so that it is quick and simple to complete. However, if due to exceptional circumstances a firm cannot access its financial information, they will need to ensure that they complete the questions where the relevant information is available.
25% Off All Harriman Books - For PIMFA Members Only
In partnership with Harriman House, PIMFA is delighted to offer members an exclusive 25% discount on high quality books from over 300+ titles in print, eBook and audio form.
These cover a broad spectrum of topics ranging from thought leadership, professionallevel technical guides, financial adviser insight and creative marketing titles through to personal finance – something for everyone!
Find out more here.
Contact Us
Bulletin contains the latest industry news and updates on key issues PIMFA are working on for members. If you have queries on our work, or anything in Bulletin, please contact us at info@pimfa.co.uk. BECOME A MEMBER Find out more about becoming a PIMFA member here.
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