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PIMFA WEEKLY NEWS BULLETIN | 4 October 2021 Dear Nigel,
Welcome to the PIMFA Bulletin; grab a coffee and take 10 minutes to read the latest news impacting you and your firm.
The UK - CPTPP negotiations begin
The UK has started negotiations with all 11 members of CPTPP - a major trans-Pacific bloc which includes Canada, Japan, Mexico and Australia. the first UK-attended meeting of the CPTPP’s UK Accession Working Group began virtually on 28 September. CPTPP had a combined GDP of £9 trillion in 2019 and is home to 500 million people including some of the world’s biggest and fastest-growing economies across Asia-Pacific and the Americas.
Joining the partnership could mean tariff-free trade for 99.9% of UK exports, including food, drink and cars, whilst also creating new opportunities for modern industries like tech and services, ultimately supporting and creating high-value jobs across the UK. Initial talks will focus on how the UK meets the standards set out in the CPTPP agreement. The deal is one of the world’s most advanced in both digital and services trade, which plays to the UK’s strengths as the world’s second-largest services exporter.
Talent, Diversity and Inclusion within the Wealth Management & Advice sector
Talent, Diversity and Inclusion are a high priority for CEOs in the sector, according to CEO sentiment surveys PIMFA have conducted over the past 18 months. In order to understand the make-up, challenges and current activities of firms, we have compiled a simple survey, based on data that we believe firms may have gathered. The questionnaire is timely given the publication of the Discussion Paper from the FCA/PRA/BoE on diversity and inclusion, to which PIMFA has now responded. Data is key to understanding the picture in the sector and any required action. We would really appreciate if HR colleagues or other individuals in the wealth management sector would provide a response. All information received will be aggregated and anonymised by PIMFA staff. Individual company data will be stored securely and not shared in any way. The data required by the questionnaire will be harder to provide for some firms, particularly smaller ones. However, even incomplete data will be useful. No matter where your organisation finds itself and how advanced your people data or diversity and inclusion initiatives are, providing responses will help obtain an accurate picture. The purpose of gathering this data is to inform initiatives we can undertake together as an industry, to promote the sector more broadly and to identify gaps where collective action can be undertaken. The link to the survey can be found here. If you have any questions, please get in touch with MajaE@pimfa.co.uk
Financial services access to global high-skilled talent needs streamlining and lower costs
Over nine months on from the introduction of the UK’s 2021 immigration system, financial and related professional services firms are seeing significant cost increases to securing the high-skilled talent that they need to compete on the global stage. Skilled, multinational and multilingual workers are key to the success of the industry on the global stage. For example, within UK-based financial services alone, 19.5% of workers are international, rising to 42% in FinTech.
While real progress has been made in removing unnecessary barriers and expanding the immigration routes available to skilled talent, businesses continue to struggle with process related issues. In many cases, relatively minor tweaks to the UK’s current mobility framework could go a long way to help UK businesses access the highly-skilled international talent they need to grow and compete globally. These challenges are explored in, ‘Global Talent Mobility: Ensuring UK competitiveness,’ a joint report from TheCityUK, EY and the City of London Corporation, which also details the areas where good progress has been made, including the removal of resident labour market testing for Skilled Worker visas. The report also calls on the UK to explore more innovative measures to allow employees to enter the UK for short-term productive work without a work visa.
Latest PIMFA Press Releases
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Citywire Wealth Manager: Pimfa appoints first
PIMFA delighted to announce shortlist for inaugural Diversity & Inclusion Awards
committee
female chair of private investors indices
FT Adviser: FCA warns wealth managers on PIMFA appoints Alison Moynihan as Chair of its Private Investors Indices Committee PIMFA Comments on FCA’s plan to tackle investment harm
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BBC: FCA signs up celebrities to warn of investment risks
Portfolio letter: Wealth Management and Stockbroking Supervision Strategy
The FCA published a Portfolio letter, entitled Wealth Management and Stockbroking Supervision Strategy, on 30 September. In it, the regulator provides an update of its view of key harms in the wealth management sector, the expectations of firms and a summary of the work the FCA intends to do.
Their objectives for firms operating in the wealth management sector are to ensure that they are not facilitating scams, fraud or market abuse; that, in the event of failure, they can wind down in an orderly manner with adequate controls to mitigate any potential loss of client assets and, on costs and charges, that consumers are fully aware of the overall cost they pay for their investment.
The use of high-quality data is fundamental to the FCA regulatory strategy, and the regulator expects firms to maintain appropriate systems and controls to facilitate the production and reporting of high-quality data on a timely basis.
PIMFA responds to the FCA/PRA/BoE DP on diversity and inclusion
PIMFA has responded to the joint FCA, PRA and Bank of England Discussion Paper DP21/2 ‘Diversity and inclusion in the financial sector – working together to drive change’. The Discussion Paper’s aim is to engage financial firms and other stakeholders in a discussion on how to accelerate the pace of meaningful change on diversity and inclusion in the sector.
While financial sector has taken steps forward on diversity and inclusion, much more needs to be done to create truly diverse and inclusive organisations. You can find PIMFA’s response here.
PIMFA announces shortlist for inaugural Diversity & Inclusion Awards
PIMFA is delighted to announce the shortlist for it’s inaugural Diversity & Inclusion Awards. Launched earlier this year and opening to entries in May, PIMFA’s industry awards received close to 100 entries and come at a time when the Financial Conduct Authority (FCA) has made clear diversity and inclusion within financial services is a key area of focus and could even become a regulatory matter in the future.
The winners will be decided in the first week of October by a group of industry peers alongside experts in diversity and inclusion from charities that PIMFA partner with. This includes Richard Wilson, Chief Executive of Interactive Investor; Peter Moores, Chief Executive of Raymond James; Andrew Croft, Chief Executive of St. James’s Place Wealth Management; Jennifer Mathias, Chief Finance Officer at Rathbones; Theresa Heaton, Head of Change at Brown Shipley; Matt Cameron, Global Managing Director at LGBT Great and Bev Shah, Chief Executive & Founder at City Hive. Individuals and firms shortlisted in each category for the Awards can be found here.
View other upcoming PIMFA Events and Learning here.
PIMFA's Consultation Responses
PIMFA’s latest Consultation Response is to the joint FCA, PRA and the Bank of England Discussion Paper 21/2 on Diversity and Inclusion in the Financial Sector Read this and all other PIMFA consultation papers here.
Quarterly economic commentary: April to June 2021
According to the Office for National Statistics’ latest quarterly economic commentary, the UK economy expanded by 5.5% in Quarter 2 (Apr to June) 2021, as the re-opening of the economy led to a rebound in consumer-facing service industries and health and education output. Early estimates show pay- rolled employees increased by 241,000 in August 2021 while vacancies have reached a record high, although there are reports of labour shortages in specific industries pointing to labour market mismatches. The Consumer Prices Index annual rate, including owner occupiers’ housing costs (CPIH), was 3.0% in August 2021 as base effects, the reopening of the economy and supply bottlenecks all played a role.
FCA perspective on measuring and assessing culture
In a speech on measuring and assessing culture and the role of purpose and the importance of D&I, Sheldon Mills, Executive Director, Consumers and Competition Culture at the FCA, said that culture remains central to how the FCA supervises regulated firms. The importance of an authentic, embedded purpose, visible leadership and an inclusive environment where staff feel safe to speak up is paramount.
Hybrid working brings opportunities and challenges. Firms need to find approaches that give due regard to safeguarding their purpose and values, the wellbeing of staff and effective oversight. Diversity and Inclusion is an aspect of culture where the investment management sector has considerable ground to make up. Firms in this sector have a huge sphere of influence on ESG, both to improve their own performance and to drive positive change through their investments. The FCA looks to firms in the sector to be effective stewards.
The regulator measures and assesses a firm’s culture against four drivers of culture: purpose, people, leadership and governance. This covers a wide range of areas – to list but a few it could include: significant business model restructures, the approach to remuneration, speak-up culture, Board and ExCo composition, diversity, succession planning, the application of the SMCR, the effectiveness of a firm’s controls environment or its governance structures. Firms with healthy cultures, cultures that are purposeful and safe, can deliver positive results for customers, employees and shareholders, for society and the environment.
Productive Finance Working Group addresses the barriers to investment in less liquid assets
The Productive Finance Working Group has published a series of recommendations which could facilitate greater investment in longer-term, less liquid assets. The Group is industry led, co-chaired by the Governor of the Bank of England, the Chief Executive of the FCA and the Economic Secretary to HM Treasury. Appropriately managed, investment in such assets has the potential to generate better returns for investors, including those saving for retirement in defined contribution (DC) pension schemes, given their typically long-term investment horizons. These types of pension schemes are an increasingly important vehicle for saving for retirement, given their assets have increased from around £200bn in 2012 to over £500bn today, and are expected to double to £1tn by 2030. Investment in productive finance assets can also benefit the wider economy by supporting the economic recovery from Covid, facilitating the transition to a net zero economy and supporting financial stability.
However, there are a number of barriers and challenges to investment in less liquid assets and therefore these investments need to be carefully managed. The aim of the Group, convened in November 2020, was to propose solutions to such barriers, including a roadmap, timetable and set of actions. In its report published today, ‘A Roadmap for Increasing Productive Finance Investment’, the Group has published four recommendations, underpinned by 13 specific actions, with a focus on supporting DC pension schemes to invest and developing the long-term asset fund (LTAF) structure.
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