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PIMFA WEEKLY NEWS BULLETIN | 7 August 2020 Welcome to your Weekly PIMFA Bulletin Grab a coffee and take 10 minutes to read this week's highlights and key issues affecting you and your firm
WE ARE IN THIS TOGETHER Dear Nigel,
We hope you and your loved ones are safe and well during this difficult time. Due to the virus, PIMFA is continuing to work remotely, and we remain committed to representing our members and providing as much useful information as possible.
In addition to the latest industry news, Bulletin contains information on the impact of the virus and other key issues PIMFA are working on for our members. If there is anything we
can help you with, please contact us at enquiries@pimfa.co.uk.
Best wishes The Team at PIMFA
COVID-19 & What's happening in PIMFA
Thank you to our Members
I would just like to say a huge thank you to all of our members for renewing their membership this year. We truly value your continued support during these unprecedented times and totally understand you have a choice. We continue to work hard for you as your industry trade body and remain committed to the future whatever that may hold for us all. If you would value a zoom / virtual conference call with our policy and other teams to discuss the current situation, current operating environments or any other issue please do get in touch. We are here to help. Richard Adler
Brexit: State of Play
Bank of England
Brexit took place in a legal sense when
Governor of the Bank of England Andrew
the UK formally left the EU on 31 January
Bailey confirmed this week that the BoE
2020. However, Brexit has not happened
has “no plan to use negative rates at the
yet in an economic sense as the UK has
moment�. He said that the UK economy
continued to apply the EU laws during the
was ahead of where he thought it would
transition period which ends on 31
be in May because of the stronger
December 2020. Over the past months
recovery than expected in the last few
Brexit has been pushed down the list of
months. However, Bailey warned that the
priorities as financial services firms had to
recent past is not necessarily a good
focus on numerous practical issues
guide to the immediate future and the
caused by the coronavirus pandemic. As
outlook for growth is "unusually uncertain".
we get closer to the end of the transition period, firms will again be facing a Brexit
The UK still faces the sharpest recession
deadline. It is important to bear in mind
on record, with the Bank of England
that, regardless of the outcome of the
expecting the UK economy to shrink by
ongoing UK – EU negotiations on the
9.5% in 2020. Although the initial estimate
terms of the future relationship, in the
was that the economy would contract by
retail investment sector, passporting will
14%, this is still the biggest annual decline
be lost. No equivalence is available in our
in 100 years. The banking sector is in a
sector under any of the existing
better-than-expected state of resilience,
arrangements. Firms will need to decide
according to a “reverse stress test” carried
how to access and operate on behalf of
out by the Bank of England. Equity finance
clients living in the EU when the UK is a
for unlisted companies, as a means to
third country post the Brexit transition.
counterbalance spiralling debt, is on the Bank’s agenda, as policymakers look for
In order to continue to service clients in
ways to facilitate more productive
the EU, firms will have to establish in an
investment into the private sector.
EU Member State and obtain authorisation from the local regulator to undertake business in that country.
Brexit: Anti-money laundering
Alternatively, they can establish an authorised passporting entity anywhere in
The European Commission will scrutinize
the EU to undertake investment business
the UK’s anti-money laundering
across the EU. Establishing an entity for
safeguards as soon as the transition
business in one country, or one for EU-
period between the UK and the EU ends,
wide passporting, are two different things
according to the Commission’s Executive
with different requirements and costs.
Vice President Valdis Dombrovskis. The
Alternatives to the establishment
scrutiny will probably start in January, as
approach are to merge with a firm that
the UK Government intends to stick to its
already has a presence in the EU, transfer
decision not to extend the Brexit transition
clients to other firms and withdraw from
period.
the EU market, or seek to do business on a reverse solicitation basis. With regards
In a letter to a French MEP, Dombrovskis
to the last option, firms need to investigate
said the UK will be assessed as any other
the situation and the attitude of the local
third country. He added that it was
regulator in specific Member States.
premature to say if the UK would be assessed as a ‘priority jurisdiction’, which
Fraud Watch Summary
includes countries with strong economic ties with the EU and a considerable impact on the EU financial system.
This week’s Fraud Watch Summary on PIMFA Podcasts
latest scams and fraud trends across sectors can be accessed here.
Don't forget to access the latest freely PIMFA Website:
available PIMFA podcasts on topics such
COVID-19 Information
as Open Finance, Wellbeing, Operational Resilience, SM&CR etc, all in our online learning library.
Visit our members only COVID-19 web area for the latest information on the virus, to access webinar recordings, download briefing notes, and view the latest global response tracker.
Click here if you have forgotten your password or to create a user account.
The public COVID-19 page can be accessed here.
PIMFA: Implicit Transaction Costs Working Group
In December 2019, we sent a letter to members about an alternative approach to calculating implicit transaction costs for inclusion in MiFID II costs and charges disclosures. More recently, it has been suggested that we should do further work with members to bring some degree of consistency to the investment categories and nominal spreads that firms might use in implementing the alternative approach. If you would like to participate in the Working Group, please contact Sarah McGuffick as soon as possible.
Please note that participants should be prepared to share material about their initial thinking/current approaches in this area – this material, suitably anonymised, will be used as a starting point for the Group’s work.
Sustainable finance - obligation for certain companies to publish non-financial information
A roadmap on a Commission Delegated Regulation was published on Tuesday 28 July. The initiative aims to complement the EU Taxonomy Regulation and provide the criteria for the publication of non-financial information for entities currently subject to the NonFinancial Reporting Directive (NFRD) including banks, large listed companies and insurance firms. The Delegated Regulation is expected to be adopted by June 2021. This roadmap will also work in parallel with the ongoing review of the NFRD as well as the technical standards under formation by the ESAs on sustainability-related disclosures.
Sustainable corporate governance
The European Commission published its roadmap for sustainable corporate governance on Thursday 30 July. Under its new mandate, the European Commission has been making a significant push against short-termism in corporate structures. With this initiative, the Commission is attempting to allow for companies to aim for long-term development and take into account sustainability-related considerations. The initiative envisaged would potentially include amendments to the EU’s Company Law Directive (2017/1132) and the consolidated Directive on Shareholder Rights (2007/36), as well as a new Directive which would require directors of limited liability companies “not to do harm” as well as take into account wider interests when decision-making.
LATEST PIMFA BLOGS & PRESS RELEASES
•
PIMFA welcomes Work and Pensions Select Committee investigation into pension scams and wider inquiry into pension freedoms
•
PIMFA welcomes Governement consultation into greater regulatory oversight of financial promotions
•
PIMFA supports TheCityUK report on recapitalising businesses post-Covid19
•
PIMFA welcomes appointment of Nikhil Rathi as Chief Executive of the Financial Conduct Authority
•
PIMFA welcomes proposed permanent FCA marketing ban for mini-bonds
•
Blog: ESG and Covid 19
EVENTS & LEARNING
PIMFA Training CASS CLIENT MONEY: What you should know in 2020
Identify weaknesses in your firms' client asset systems to prevent causing serious financial detriment to customers and counterparties. The aim of this online course is to support you: •
Stay up to date and compliant with current CASS rules
•
Recognise the FCA’s concerns regarding Client Assets
•
Clarify your firm’s responsibilities when handling client money and safe custody assets
•
Design effective controls and governance to reduce the possibility of regulatory and reputational damage
•
Create and maintain robust oversight arrangements of client assets
•
And more...
For more info and to book your place, please click here.
PIMFA are delighted to be partnering with WLTH 2020. The event takes place entirely online on 15-16 September.
As a PIMFA member, we are delighted to be able to offer you a FREE ticket to the event. You can book your place here.
PIMFA IN THE PRESS
Money Marketing: Liz Field: We need a flexible activity-based approach to working Professionsl Adviser: PIMFA Wealth of Diversity Conference postponed until 2021 FT Adviser: Closing the racial wealth gap Your Money: MPs to launch investigation into pension scams Portfolio Adviser: MPs to scrutinise scams in first stage of pension freedoms inquiry FT Adviser: What great service looks like
LATEST PIMFA CONSULTATION RESPONSES
PIMFA’s latest consultation response is to HM Treasury regarding their consultation on expanding the Dormant Assets scheme
Read this and all of our other PIMFA consultation papers here.
WHAT'S HAPPENING IN OUR INDUSTRY
HM Treasury - Amendments to the PRIIPs Regulation
Having already "onshored" the PRIIPs Regulation using powers under the European Union (Withdrawal) Act 2018, HM Treasury has produced a brief paper outlining changes that it intends to make to address "the most pressing concerns with the PRIIPs Regulation". Effective from the end of the Transition Period, amendments to the onshored PRIIPs Regulation (SI 2019/403) will enable:
•
the FCA to clarify the scope of the PRIIPs regime through its rules;
•
the FCA to specify the "appropriate information on performance" that should appear in
a KID instead of the currently-prescribed performance scenario; and •
HM Treasury to extend the existing exemption of UCITS from the PRIIPs regime for a
period of up to 5 years after the current exemption ends on 31 December 2021. The paper also indicates that "in the longer term, HM Treasury intends to conduct a more wholesale review of the disclosure regime for UK retail investors".
Investment Association – first draft of Common Shareclass Register available
The PS19/29 rules aimed at making transfers of funds between “platform service providers” easier will take effect from 1 February 2021. To facilitate firms’ compliance, the Investment Association has developed a register of UK investment funds’ common share classes. A first draft of the register is now available here for firms to familiarise themselves with.
The draft register covers around 3800 funds and provides information on the “primary shareclass” designated by fund managers for each of their funds. Further refinements to the register are being worked on (e.g. differentiating between the income and accumulation units for each shareclass) and updated versions will be made available when ready.
FCA, Prudential Regulation Authority (PRA) and Bank of England launch Complaints Scheme consultation
The FCA, PRA and the Bank of England have launched a joint consultation on the Financial Regulators’ Complaints Scheme, asking how the scheme’s language can be improved to make it more accessible to consumers. It also clarifies the policy on making ex-gratia compensatory payments.
It will open immediately for a period of 8 weeks, closing on Monday 14 September.
The FCA has separately issued its response to the Annual Report of the Office of the Complaints Commissioner.
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