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PIMFA WEEKLY NEWS BULLETIN | 25 January 2021 Dear Nigel Welcome to the PIMFA Bulletin; grab a coffee and take 10 minutes to read this week's latest industry news impacting you and your firm.
The Latest on Brexit
UK–EU Financial Services Regulatory Cooperation
Last week, Steven Maijoor, Chair of the European Securities and Markets Authority, spoke in support of the European Commission's demands for additional clarification of the UK’s intentions on diverging from the current financial services regulation before granting equivalence to UK rules. He said that the fact that there is no certainty as to how the UK regulatory and supervisory system will develop represents a real issue in equivalence discussions. Just before the end of the Brexit transition period, the UK and EU agreed the EU–UK Trade and Cooperation Agreement, which does not cover the financial services sector. The two sides are currently working on a Memorandum of Understanding (MoU) which will not be legally binding but will set the framework for the future relationship in financial services.
Chancellor Rishi Sunak also spoke last week about the future regulatory cooperation
with the EU and said that the MoU, once agreed, will provide structure for the future cooperation in financial services. He said that the City has always innovated and adapted to changing circumstances to thrive and prosper, and it will continue to do so in the future. Sunak added that regulation is important but so is time zone, language, culture and creativity and all this makes him feel confident about the future of the City.
EU to Step Up Efforts to Attract Derivatives Clearing Business
The European Commission is stepping up efforts to attract derivatives clearing business now that the UK is no longer inside the EU Single Market. The Commission has granted temporary equivalence to the UK clearing houses, but the expectation is that the EU will slowly reduce reliance on UK clearing houses when dealing eurodenominated derivatives. Speaking about fostering openness, strength and resilience of the EU’s financial system at press conference last week, the European Commissioner for Financial Services said that the Commission needs to assess how to reduce excessive reliance on foreign investment banks and funding in foreign currencies, and avoid over-reliance on foreign financial market infrastructure providers. The fact that a large proportion of euro-denominated contracts are cleared outside the EU is a point of vulnerability, she said, and added that the message to the industry is clear - financial entities in the EU are expected to reduce their exposures to UK CCPs, and CCPs within the EU must build up capacity.
HM Treasury Call for Evidence on Overseas Framework
The Treasury (HMT) has published a call for evidence on Overseas Framework running until 11 March. It aims to gather information to help understand how the UK’s current overseas framework supports its position as a global financial centre. The Government wants to ensure the UK legislative and regulatory regimes for overseas access achieve the goal of attracting liquidity and activity to the UK, while supporting financial stability and openness in financial markets.
HMT is particularly interested to gather information on the overseas persons
exclusion, the Financial Promotion Order, recognised overseas investment exchanges, overseas long-term insurers, and investment services equivalence under the Markets in Financial Instruments Regulation. This is very much an open information gathering and learning exercise, and HMT wants to hear from stakeholders as to how the regimes work in practice and how market participants navigate them and might think about using them in future. PIMFA will respond to this call for evidence.
Government to Review EU Derived Employment Laws
Speaking in front of the Parliamentary Business, Energy and Industrial Strategy Committee, Kwasi Kwarteng, newly appointed Secretary of State for Business, Energy and Industrial Strategy, confirmed that the Government will be reviewing EUderived employment laws, but said there will be no “whittling down” of employment standards. Kwarteng said that the Government wants to examine the entire range of issues and decide which ones it wants to keep. The UK is above the average European standard, he said, and wants to maintain that. “We can be a high-wage, high-employment economy, a very successful economy, and that’s what we should be aiming for,” he added.
FSCS Forecast a Levy of £1bn
PIMFA has reacted with disbelief to the FSCS compensation forecast, saying that, in any other industry, this would be considered a national scandal and that reform is urgently needed.
Tim Fassam, Director of Government Realtions and Policy at PIMFA commented: “In any other sector, a forecast for compensation of over £1bn would be the focus of national scandal – £1bn of compensation represents £1bn worth of financial loss, emotional stress and economic hardship for thousands of UK consumers.
The full press release is available here.
JMLSG Note: Impact of the End of the Brexit Transition Period on its Guidance
Report - Preventing Modern Slavery & Human Trafficking: An agenda for action across the financial services sector
On the 14th January, the Joint
Themis has published a report in
Money Laundering Steering Group
partnership with the UK
(JMLSG) published a note on the
Independent Anti-Slavery
implication of the end of the Brexit
Commissioner and the Tribe
transition period on JMLSG
Freedom Foundation, to increase
guidance. As the guidance is based
awareness and understanding
on The Money Laundering, Terrorist
within the financial services sector
Financing and Transfer of Funds
of the scale and nature of Modern
(Information on the Payer)
Slavery and Human Trafficking in
Regulations 2017 (MLRs, prior to
the UK and globally, and to
legislative amendments), there are
encourage cultural change and
still some references within it based
action at the most senior levels
on the premise of the UK’s
within the Financial Sector.
membership of the EU. The report found that there are low These are no longer appropriate
levels of awareness of the
and will be amended accordingly in
prevalence of modern slavery with
due course.
many financial services firms believing this is a matter that does
For details of the areas that are
not affect them. The report
specifically affected, please see the
discusses in detail the latest
JMLSG webpage.
regulatory developments including the UK Modern Slavery Act of 2015, and emerging best practice and calls upon senior leaders to engage with these issues and address modern slavery risks. You can read the report here.
PIMFA Compare My Allocations Report
Look beyond the obvious and see how your firms asset allocation policy stacks up against the industry, with the PIMFA Compare My Allocations report.
To find out more, visit our website or email indices@pimfa.co.uk to arrange a free demonstration.
IRSG Sets Out Financial Services Roadmap for UK’s G7 Presidency
The International Regulatory Strategy Group (IRSG), an advisory body to both the City of London Corporation and TheCityUK, has set out its key areas of focus in financial services as the UK takes over the Presidency of the G7 this month. The recovery from the COVID-19 pandemic, climate change and digital agenda will all be central to the UK’s Presidency, including at the 47th G7 Summit in Cornwall from 11– 13 June. The IRSG underlines the importance for the UK to demonstrate global leadership on these vital issues by fostering international cooperation and advocates four areas of focus for the UK: 1. Global regulatory coherence for pandemic recovery – this should include minimising potential future fragmentation and protectionist policies in the wake of the pandemic and cover recapitalisation of the corporate sector and pushing back against localisation on issues such as capital, liquidity and data. 2. Leadership on climate agenda ahead of COP26 – mobilising green finance, improving climate-related risk reporting and disclosures and promoting carbon markets. 3. Digital policy continuity, including on digital taxation – ensuring continuity on G7 policy on digital taxation through an agreement on the OECD’s digital taxation framework, global data standard, promoting digital capabilities in RegTech, SupTech and cyber.
4. Alignment with G20 global policy priorities - ensuring close co-operation with the Italian G20 Presidency and continuity on key themes following the recent Saudi G20 presidency.
PIMFA in the Press
Latest PIMFA Press Releases
PIMFA Press Coverage
FSCS levy forecast of £1bn
Citywire: Pimfa slams ‘national
compensation bill is scandal that
scandal’ of £1bn FSCS bill
shows regulation is failing both consumers and firms
Money Marketing: PIMFA chief Lessons on leadership in lockdown
PIMFA welcomes FCA warning on crypto-assets but calls for more to
Telegraph: Bitcoin suffers 25pc slide
be done to protect consumers
as regulator weighs in
PIMFA calls for FCA fines to
Professional Adviser: Watch -
contribute to FSCS until long term
Interview with PIMFA's Simon
solution to the levy is agreed
Harrington on regulatory fees and lobbying for change
PIMFA calls for urgent reform of supervision & FSCS levy to protect
Citywire: Radical advice reforms
consumers & industry as it sets out
proposed as FCA's RDR review
a roadmap towards lower FSCS bills
looms
PIMFA disappointed to learn of
FT Adviser: FCA releases DB
supplementary costs to be levied on
transfer advice assessment tool
members by FSCS
Latest PIMFA Consultation Response
PIMFA’s response to FCA: Call for Input on the Consumer Investment Market.
Read this and all other PIMFA consultation papers here.
EVENTS & LEARNING
PIMFA Training IS YOUR APPROACH TO VULNERABILITY FIT FOR PURPOSE? 23 February 2021 Fees: Member: £300 | Non-Member: £400 Bring a colleague along for FREE! Use code tcrewardb1g1f at checkout for a 50% discount on 2 tickets.
This practical live online learning session, underpinned by PIMFA member guidance on vulnerability and delivered by an experienced senior practitioner, will help your firm review your current approach to vulnerability in light of COVID-19 and recent regulatory announcements
In this live online learning sessions you will learn how to: •
Interpret what the FCA’s latest guidance on vulnerability means for your firm
•
Grasp the full extent of your regulatory obligations on vulnerability in light of COVID-19
•
Adopt the strategies and approaches leading firms take to developing and embedding a vulnerable-centric approach
•
Embed a culture that consistently supports vulnerable clients better than you do today
•
Adapt your firm’s products, services and processes towards the fair treatment of vulnerable clients
•
Critique, review and audit your approach to vulnerability measuring how well you serve vulnerable clients
Meet your Trainer: Caroline Wells – Customer Experience Expert
As a pioneer of accessible and inclusive customer service, Caroline has worked with people in and around financial services for over 25 years. Along the way, Caroline has led teams to win coveted awards, including Public Service Organisation of the Year, Top 100 Index, Leaders in Diversity, and was shortlisted for the National Centre for Diversity’s Most Inspirational Individual Award in 2017. Having also played a significant role at the Financial Ombudsman Service in customer experience and outreach work, Caroline Wells is now applying her customer service and complaints handling expertise as a member of the Trust’s training and consultancy team.
For more info and to book your place, please click here.
PIMFA Events PIMFA VIRTUAL FEST V2 9-10 March 2021
Following on from the HUGE success of the inaugural PIMFA Virtual Fest in June 2020, PIMFA is proud to announce the Virtual Fest V2 will be taking place on 9 & 10 March 2021.
Just like the inaugural event, the Virtual Fest V2 is a great opportunity for attendees to gain valuable insights, hear from industry experts, earn CPD hours and make connections with fellow colleagues.
We remain dedicated to supporting your continued professional development during this period of isolation. The Virtual Fest V2 will provide access to a variety of content in the forms of webinars, virtual sessions with speakers & trainers, videos, PDFs and online resources.
To view a copy of the Post-event report, including profile of attendees and a summary of all sessions please click here.
Taking place over two days, the PIMFA Virtual Fest V2 will be delivering presentations on key areas which members have identified as their key short- and long-term focus including: •
CEO Panel – What Have we Learnt and How to do we Rebuild Together
•
The Future of Work – What do You Need to Know?
•
What Might 2030 Hold for Financial Advisers?
•
Operational Resilience: Lessons Learnt in 2020 & What’s Next in 2021
•
The Future of Regulation
•
And more…
Speakers and panellists are being carefully selected to ensure the delivery of high level content and a broad spectrum of diversity. If you’d wish to find out more about speaking or sponsoring this event please email events@pimfa.co.uk.
For more info and to book your place, please click here.
View all other upcoming PIMFA Events and Learning here.
What's Happening In Our Industry
FCA Proposes CMC Fee Price Cap
On 21 January the FCA published proposals to introduce a price cap on the fees claims management companies (CMCs) charge their customers in relation to claims for financial products and services. Currently, the fees paid by some consumers are not proportionate to the value they get from using CMCs, with some consumers paying fees of more than 40% of the redress they receive. The proposals are part of the FCA’s broader business plan priority to ensure consumers are offered fair value products. They apply to the management of claims relating to financial services and products, except for PPI claims which remain subject to an existing cap of 20%.
The full press release is available here.
FCA: Information About Brexit from EEA Regulators
Following discussion with PIMFA and other bodies about how the FCA could help firms dealing with EEA regulators following the end of the Transition Period, the FCA have published links to their webpages and details of their transition regimes where relevant.
The links are available here.
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