PIMFA WEEKLY NEWS BULLETIN
24
July 2023
Financial Advice Business Benchmarks
PIMFA has partnered with the Chartered Institute for Securities & Investment (CISI) and Nextwealth to create the Financial Advice Business Benchmarks survey for 2023.
This is your opportunity to share what is changing across financial advice businesses and we would encourage you to fill out the survey, which should take between 20-30 minutes to complete and can be returned to across different sessions – your progress will be saved along the way.
A link to the survey can be found here and all participants will receive a free copy of the report.
Consumer Duty Corner: Top tips for firms
1. Listen to the Financial Conduct Authority (FCA) – The series of Consumer Duty communications (e.g. the latest podcast on how firms need to monitor outcomes) set out the FCA’s expectations. Firms should ensure their firm focus aligns to the Regulator’s key priorities of delivering fair value and good consumer outcomes.
2. Be able to effectively answer the FCA's ten key questions – The questions taken from the finalised guidance provide a good indication of the FCA’s focus post implementation – consider them carefully to identify any gaps or areas of improvement.
3. Analyse your target market and segment your client cohorts –This will help to determine if you are delivering fair value and good outcomes to each cohort. Providing fair value to different groups of retail customers is central to the FCA’s rules.
4. Complete fair value assessments – Firms should consider areas highlighted in the FCA’s Fair Value Frameworks Review (e.g. consumer outcomes, reviewing charging models) to assess value through the life cycle of a product or service, and test and monitor to determine if this is being achieved.
5. Ensure your data strategy is in order – Evidencing compliance is vital: firms need to ensure they document and record their processes, decision making and ongoing reviews of products, services and procedures. As the FCA envisage greater use of qualitative data and analysis of customer behaviours, firms may need to consider enhancements to procedures and systems.
Sustainability Disclosure Requirements (SDR) Policy Statement delayed until Q4
Following the FCA’s Sustainability Disclosure Requirements (SDR) and Investment Labels consultation and the range of comments received, the FCA has decided to delay the publication of the Policy Statement until Q4 2023, having previously planned to publish it in Q3.
In an update to the Regulatory Initiatives Grid, Nikhil Rathi, Financial Conduct Authority Chief Executive and Sam Woods, Deputy Governor, Prudential Regulation at the Bank of England, co-Chairs of the Regulatory Initiatives Forum, said that once published: “These policy changes will help the UK’s asset management sector thrive by setting standards that improve the sustainability information consumers have access to.”
Proposed material fraud reporting requirements
Changes to FCA Firm Reference Numbers (FRNs) and Product Reference Numbers (PRNs)
In addition to the new Failure to Prevent Fraud offence (expected to come into force in 2024), on 19 July the Government published proposals to increase reporting requirements on large companies, including a requirement to report on material fraud. This would need to include an assessment by the directors of the risks of material fraud and the measures in place to prevent and detect fraud.
The Financial Reporting Council (FRC) has announced that it is developing non-statutory guidance to assist firms in complying with the new reporting requirements (these will come into force on 1 January 2025, if approved).
FCA Permanent Digital Sandbox
The FCA use 6 and 7-digit Firm Reference Numbers (FRNs) to uniquely identify firms, and 6 and 7-digit Product Reference Numbers (PRNs) to identify funds. They issued the first 7-digit reference numbers on 18 July 2023. Based on feedback received from firms, reference number 999999 was not issued to a firm or fund as this reference is reserved for special purposes by a number of firms.
Firms that already have a 6-digit FRN or PRN will keep that number. They will not change. If you have any questions about these changes, please contact FRNPRNChanges@fca.org.uk
The FCA has announced that the Digital Sandbox, which has only been available temporarily to participants in FCA pilots and tech sprints, will be made permanently available from 1 August 2023.
The permanent Digital Sandbox is part of a range of FCA market-facing tools and will include features to support firms’ innovation to launch new products and services. In particular, the Sandbox will make a wide range of highquality datasets available, as well as robust data security protection to allow experimentation while safeguarding data assets.
The Sandbox aims to become a collaborative platform to facilitate diversity of thought, share learning and foster an ecosystem. The observation deck feature will also enable interested parties to observe in-flight testing at a technical level.
Once the Sandbox is made permanently available, firms will be able to apply to participate under investment or pension themes.
Watch the space on the FCA website for more details and information.
FCA Guidance Consultation: Financial Promotions on Social Media
The FCA has published a guidance consultation on the use of financial promotions on social media, which will replace the existing guidance on social media and customer communications (FG15/4) issued in 2015.
The FCA expects this guidance to support its Consumer Investments Strategy outcome of seeking a 50% reduction in the number of retail consumers investing in high-risk investments (HRIs) who demonstrate a low-risk tolerance or characteristics of vulnerability by 2025.
PIMFA is seeking views on this guidance consultation, and members should contact Simon Harrington at SimonH@pimfa.co.uk should they have any input.
The guidance consultation can be accessed here.
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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