Annual Report 2016 2017

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The Wealth Management Association WORKING FOR THE INVESTMENT COMMUNITY & THEIR CLIENTS

The Wealth Management Association (WMA) is the trade association that is the face of the investment industry. WMA aims to ensure that business, regulatory, tax and other relevant changes across the UK and Europe are appropriate and proportionate for the investment community and its clients.

Our members WMA’s membership comprises of 179 firms in the wealth management community that look after over £835 billion of wealth for over 3 million retail investors. These firms operate over 580 sites across the UK and employ over 32 000 staff. 100 of these are full member firms such as wealth managers, stockbrokers and private banks, who deal in stocks, shares and other financial instruments for individuals, trusts and charities through a range of services spanning execution only, advisory and discretionary management. Our 79 associate member firms provide professional services to our full member firms.

Our objectives and strategy In line with our five strands of strategy, WMA supports the investment community through: Advocacy Speaking up for the members and promoting the industry Influence Influencing policy and regulation in both the UK and Europe Research, analysis, insight and information Providing facts and figures on the industry, early warning and interpretation of rules, guidance to our members Thought leadership Leading the debate and discussing trends that affect the industry, our members and their clients Facilitation, education and engagement Sharing of good practice to enable our members to apply that learning to improving their own businesses

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• • •

179 firms 32,000 staff 580 sites across the UK

£835

Billion Assets Under Management

• • •

£3 million Retail Investors

WMA Relationships Amongst other UK and European trade associations, the WMA has good working relationships with: • • • • • • • • • • • • •

All Party Parliamentary Group (APPG) Association of British Insurers (ABI) Association of Financial Markets in Europe (AFME) Association of Investment Companies (AIC) Auditing Practices Board Bank of England British Bankers Association (BBA) Brussels-based think tanks eg. Bruegel, CEPS and Finance Watch Chartered Institute for Securities & Investment (CISI) Cicero Group Council of the EU and Members Department for Business, Energy & Industrial Strategy Euroclear UK & Ireland (EUI, ‘Crest’)

• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •

European Banking Authority (EBA) European Commission Irish Stock Exchange European Insurance and Occupational Pensions Authority (EIOPA) European Parliament European Retail Financial Forum (ERFF) European Securities & Markets Authority (ESMA) Financial Conduct Authority (FCA) Financial Future (FF) Financial Ombudsman Service (FOS) Financial Reporting Council (FRC) Financial Services Compensation Scheme (FSCS) FTSE Guernsey Financial Services Commission (GFSC) HM Revenue & Customs (HMRC) HM Treasury (HMT) House of Commons: Treasury Select Committee House of Lords: European Committee Institute of Chartered Secretaries and Administrators (ICSA) The Investment Association (IA) Isle of Man Financial Services Authority Jersey Financial Services Commission (JFSC) Joint Money Laundering Steering Group (JMLSG) Joint Trade Association Group (JTAG) London Clearing House (LCH) London Stock Exchange (LSE) National Crime Agency (NCA) Office of Fair Trading (OFT) Prudential Regulatory Authority (PRA) ShareSoc Society of Trust and Estate Practitioners (STEP) TheCityUK (TCUK) The Takeover Panel Tax Incentivised Savings Association (TISA) Trade Association Consultative Committee (TACC) UK Financial Investments (UKFI) UK Listing Authority (UKLA) UK Shareholders Association (UKSA) Various other UK & European trade associations

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Chairman’s Report

It has been a momentous 12 months for the WMA, starting with the Brexit Referendum on 23rd June 2016, and all that that now entails, and ending in our overwhelmingly supported merger with the Association of Professional Financial Advisers (“APFA”) and thereby creating the larger and stronger Personal Investment Management and Financial Advice Association (“PIMFA”).

PIMFA is thus now essentially the sole UK industry association representing the private client managers, financial advisers and stockbrokers, and thereby furthering the vital collective interests of millions of long term savers through promoting both the responsible and effective stewardship of their investments.

It has also been an intensive 12 months for the WMA. Our mission is, and will continue to be as PIMFA, to create an optimal operating environment so that our member firms can focus on delivering the best service to clients and provide this responsible stewardship for their clients’ long term savings and investments. This requires the WMA – now PIMFA – to work constantly to advocate and influence on behalf of its membership while promoting the value of the industry, and not just the value for the clients that use investment services, but also the value for the UK economy as a whole. This necessitates constant interactions

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with key industry stakeholders such as the UK Government and Treasury, the FCA and FSCS, and the European Parliament, Council and Commission, while working closely with other financial services associations, industry groups and professional bodies.

PIMFA is thus now essentially the sole UK industry association representing the private client managers Key Activities The Chief Executive’s section and elsewhere in this report cover activities and successes of the WMA during the year, and I would particularly like to highlight four areas: - The evolution of MiFID II has required considerable work for the association to ensure that its detailed requirements and implementation are in a form that works for our members and their clients. As a result of intensive lobbying both with the EU and the FCA, many significant changes both in the rules themselves, and in their interpretation, have been achieved to the great benefit of our members and their clients.

- The successful modification of the Prospectus Directive to enable Qualified Investors (and hence discretionary portfolio managers on behalf of their private clients) to buy corporate bonds for amounts below the originally intended E100,000 threshold, thereby ensuring that such retail investors are not disadvantaged.

- Working with the DEXEU, the Bank of England, the FCA and other Governmental bodies to provide essential input for the Brexit negotiations in relation to the situation both of managed and advised client investment portfolios, and direct retail investors operating through Brokers.

- Negotiating with MSCI to handle the transition from FTSE to MSCI in relation to the WMA private investor indices, so as to maximise the benefits for member firms and the WMA itself.

Accounts Last year we mentioned the need to take actions to improve the Profit and Loss account, and it is good to report that, before the exceptional costs of £61,380 relating to the merger with APFA, we are showing a profit of £26,923. This is fully in line with our stated wish last year to show further improvement in our underlying results. A major cause of this has been very tight control over administrative expenses which are showing a reduction on the 2016 level.

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We ended the year with Cash and Short Term Deposits totalling £1.61 million (2016: £1.47 million) and a Net Worth of £1.34 million (2016: £1.37 million).

WMA Board and Management During the year Charlotte Black and Adam Seale resigned from the Board and I would like to thank them for their great help and valued counsel during their term of office.

I would like to thank all the board directors for their invaluable help in providing oversight to the running the WMA, and in particular I would like to express on behalf of the whole board our great appreciation for the tremendously hard and effective work that our CEO Liz Field and all her team have put in during another very busy year indeed; it is they in particular who make the WMA, despite its relatively small size, such an effective industry association.

I should also certainly not forget to thank and appreciate the many member firms, and the executives who work in them, who so very usefully provide resource and expertise to our many working committees.

Looking Forward We ended the year – as the WMA – with a 100 full members and a further 79 Associate Members. It was estimated that at that time these member firms

looked after roughly £835 billion of long term savings and wealth for 3 million individuals. With the merger with APFA we start our new financial year as PIMFA with a very considerable increase in the numbers of member firms, and also a noticeable increase in funds under management and advisement.

This greatly strengthens our ability to influence and help shape regulation and strategy in a beneficial way for the many millions of individuals whose savings and investments are managed, handled and advised by our member firms. With the increasing importance of personal long term savings, this activity is so vital to our modern economy.

greatly valued advice and support over this period. I would also like to thank all those who have been on the staff of the association during this time and have worked so very hard to achieve our successes. I would particularly like personally to thank both Tim May and Liz Field who have each been CEO during my chairmanship, and have therefore been responsible for driving the association forward in such a greatly productive way.

I wish PIMFA and all its member firms every success in the future.

With the merger I am delighted to welcome, to what is now the PIMFA Board, four new directors from APFA: Lord Deben, Gary Bottriell, Martin Greenwood and Julie Hepworth.

After having spent 5 years as chairman (of first APCIMS, then the WMA, and now PIMFA) the time has come for me to retire from the board, with effect from September 2017, so this is my final Chairman’s Report. I am delighted, as has already been announced, to report that Lord Deben has taken over from me as PIMFA chairman.

Tim Ingram Chairman The Wealth Management Association

I have had a hugely enjoyable time as chairman and would first like to thank all those who have been board members during this time, and given me such

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Chief Executive’s Report Quote This past year has seen a whirlwind of activity for all of us, not least because of Brexit. Within 24 days of our new financial year in 2016 we found our workload in the WMA had doubled. Uncertainty, opportunity, and a changing landscape. The Brexit vote has revealed all three. Summer 2016 was spent rapidly redeploying the team to work with our industry colleagues to produce sound analysis that both positioned our sector and identified quick wins in a Brexit negotiation that would benefit our members and their clients.

The team and I spent many meetings with Treasury, DEXEU and other Government Departments reinforcing the key messages in our initial and additional papers. We launched a three phase approach to the Brexit process in September that was picked up by the Bank of England and FCA, and later by the Government in speeches and policy statements. We hypothesised about a UK regulatory dividend for firms with UK-only clients, and a (potentially difficult) dual regulatory approach incorporating EU-based material for firms with clients in other member states. Six months later this has returned to the broader discussion agenda advocated by others. We were well ahead of the game in our assessments and approaches to issues such as passporting, funds access, and cross-border brokerage, and made clear early to Government the very real problems for most of our firms that would arise from a break-up of the UK. All this has been effective and widely referenced as you will have noted in the Government’s, FCA’s and indeed collective industry work (such as through the IRSG and TheCityUK).

During the year we have represented the private individual and the firms that provide them sound advice and investment management on many industry and Government Committees as we moved towards the triggering of Article 50, and have given numerous public presentations. This will continue for some time to come.

I said that our workload had doubled as a result of the Brexit vote. That is because we have, of course, had to continue with business as usual. We are still in the EU until after Brexit with all the rights and obligations entailed, including the requirement to bring into effect all EU legislation and regulation that comes into play before 2019, as well as ongoing material from our own Government. And firms are of course still in the massive process of having to implement legislation and regulation from the recent (and not-so-recent) past, such as MiFID II/MiFIR, PRIIPS, GDPR, Benchmarks, 4AMLD, CSDR, SFTR, and the SMRC due out soon for consultation, to name a few.

We continued to develop our events programme and regional engagement so that firms can be kept up to date on policy and industry developments. This included our first Fintech conference in September, which proved to be a hit and will be repeated next year. Our Annual Summit drew over 450 delegates to hear industry, regulatory and government speakers and was so timely, it was on the day that a new US president was elected! The economic implications of Brexit and the presidential appointment were, of course, topics of the day.

Our first Millennial Forum report was launched at the Annual Summit. This reflected 6 months of hard work and deliberation from industry millennials who worked with the research function on key questions that affect the industry’s ability to attract, retain and engage millennial clients. This huge topic raised other questions and requires more in-depth consideration, which next year’s cohort will work on.

After many years, the WMA chose to change its provider for the WMA indices and on 1st March MSCI took over the mantle from FTSE to provide the underlying data for the MSCI WMA private investor index indices. Managing change can be a challenge and there is much work to do to transition from FTSE to MSCI. I thank our FTSE colleagues for their long-standing relationship with WMA and our predecessor organization APCIMS and look forward to establishing enhanced indices with MSCI. During the early part of 2016, we had started to focus more on financial planning and advice as most of our firms geared up their own offer or strengthened the relationships with advisor firms. We have a Heads of Financial Planning Forum and a Committee for Compliance in Financial Advice, which we established in late summer 2016. Our call was

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heard to bring the UK definition of advice in line with that in the Markets in Financial Instruments Directive (MiFID II) definition of it as a personal recommendation, and the Government subsequently confirmed that personal recommendations can only be made by regulated firms. In the meantime, though, conversations had started with APFA, the trade association for advice and planning firms, and after many months of meetings and conversations, we merged with them on 1st June 2017, with over whelming support from our membership.

Our new name, PIMFA – the Personal Investment Management and Financial Advice association, reflects the activities undertaken by the combined membership: Investment Management and Financial Advice for private individuals and families. Our new strapline, Building Personal Financial Futures, also reflects the important and vital role our firms fufill in providing responsible stewardship of clients’ long term savings and investments.

There was a huge amount of work and effort during the year to effect the merger, including investment in IT and a new website ready for the launch on 1st June 2017.

We have a unique focus amongst trade associations as our firms are the face of financial services to the private individual. As it starts the new year, PIMFA currently represents small and medium sized full member firms that look after at least ÂŁ835bn of some 3 million private investors by helping them with their investments and advising them on their financial wellbeing. We also have 100 Associates, who work with us on policy, informing and enabling members of new developments that will enhance their businesses and sponsor our events and without whom we would not be able to run them at the low price points for members.

My thanks to all members, who actively support us, many who also provide individuals to contribute to committees, working parties and forums. My thanks also to my Board, particularly through the merger process this year.

Finally my thanks to the Staff, all of whom believe passionately in the role the members play for their clients and as such give more than 100% to doing what we need to do to support them.

Liz Field, Chief Executive The Wealth Management Association

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The WMA Leadership team

Liz Field

Tim Ingram

Chief Executive

Chairman

Board

Andrew Ross

(Deputy Chairman) Cazenove Capital Management

Sir David Howard BT Charles Stanley & Co Ltd

Jonathan Wragg

Staff

David Cobb

Smith & Williamson

Paul Killik

Killik & Co LLP

Sarah Soar JM Finn & Co

Investec Wealth & Investment Ltd

Rupert Dickinson

Barclays Wealth and Investment Management

James McCulloch

Speirs & Jeffrey Ltd

David Loudon

RedmayneBentley LLP

John Barrass

Andy Thompson

Jason Baxter

Murray Asset Management Ltd

Deputy Chief Executive

Ian Cornwall

Andy Pomfret

Sheena Gillett

Michelle Read

Amanda Wall

Richard Adler

Michael Morley

Emma Clarke

Giulia Lupato

Zaida Espana

Jonathan Read

Noelle Buckley

Jasmine Quashie

Ana Gallego,

Heidi Bryant

Ruthven Gemmell

Coutts & Co

Head of Communications and PR

Business Development Co-ordinator

Director of Regulation

Finance and Business Services Manager

Policy Advisor

Director of Operational Policy and Research

Business and Communications Co-ordinator

Content Manager

Director of Investment and Membership

Director of Strategic Partnerships

Membership Development Officer

With thanks to those who have served on the WMA board during this year and have now stepped down: • Adam Seale (left May 2017) • Charlotte Black (left September 2016)

Head of Research

Events Manager

Celeste Houghton Executive Assistant to Liz Field and John Barrass (Joined in February 2016)

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Policy Advisor

Business Development & Committee Co-ordinator

As at 31st May 2017

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WMA members Full Members

100 of our members are wealth management and broking firms that deal directly for the private investor.

Over £835 billion of the country’s wealth is under the management of these members.

Our current list of full members is as below:

ACPI Investments Ltd ADM Investor Services Intl Ltd A J Bell YouInvest Albert E Sharp Andrews Gwynne LLP Arbuthnot Latham & Co Ltd Arcrate* Arnold Stansby & Co Ltd Barclays Bank Plc Barratt & Cooke Bellecapital UK Ltd Blankstone Sington Ltd Bordier & Cie Brewin Dolphin Ltd BRI Wealth Management Plc Brooks Macdonald Asset Mgmt Cambridge Investments Ltd Canaccord Genuity Wealth (International) Ltd Canaccord Genuity Wealth Management Cave & Sons Ltd Cazenove Capital Management Charles Schwab UK Ltd Charles Stanley & Co Ltd City Asset Management Plc Close Brothers Asset Management Cornelian Asset Managers Ltd Coutts & Co Cunningham Coates Stockbrokers*** Davy Duncan Lawrie Asset Management Ltd Edwards Securities Ltd EFG Harris Allday Equiniti Financial Services Farley and Thompson Stockbrokers Ferry Financial* Fiske Plc

Associate Members Actuare Aldrich & Co Allfunds Bank Altus Ltd AutoRek BITA Risk Bovill Ltd BRP Bizzozero & Partners UK Ltd Calastone Ltd Cass Business School Charles Russell Speechlys LLP Chartered Institute for Securities & Investments (CISI) Clearstream Banking SA Clyde & Co LLP CoFunds Ltd ComPeer Ltd Deloitte LLP Dion Global Solutions (London) Ltd Duff and Phelps Ltd ERI Banking Software Ltd Euroclear UK & Ireland EY Farrer & Co Financial Crime Intelligence Ltd Financial Services Training Partners FIS Global

GHC Capital Markets Ltd Halifax Share Dealing Ltd Hargreave Hale Ltd Hawksmoor Investment Management Ltd Heartwood Wealth Management Ltd Hedley & Company Stockbrokers Ltd HSBC Global Asset Management UK Ltd HSBC Investment Services Hubwise Securities Ltd ICON Personal Share Dealing** IFPC Ltd IG Group IM Asset Management Ltd Interactive Investor Plc Investec Wealth & Investment Ltd James Brearley & Sons James Hambro & Partners LLP James Sharp & Co Jefferies International Ltd JM Finn & Co Ltd Killik & Co LLP LGT Vestra Lloyds Banking Group, Wealth Investment Office MAIA Asset Management M D Barnard & Co Ltd Mosaic Money Management* Multrees Investor Services Murray Asset Management Ltd N W Brown Group Ltd Odey Wealth Management Orbis Access (UK) Ltd Pilling & Co Prospect Wealth Management* Quilter Cheviot Ltd Ramsey Crookall & Co Rathbone Brothers Plc

Raymond James Investment Management Plc R C Brown Investment Management Plc Redmayne-Bentley LLP Rossie House Investment Management Rothschild Ruffer LLP S&T Asset Management LLP Sanlam Private Wealth Santander UK Plc Saranac Partners Ltd The Share Centre Smith & Williamson Investment Management Ltd Speirs & Jeffrey Ltd Standard Life Wealth Ltd Stockdale Asset Management* TCAM Asset Management Ltd TD Direct Investing (Europe) Ltd Thesis Asset Management Plc Tilly Bailey & Irvine LLP Tilman Asset Management Union Bancaire Privée, SA Vartan Ravenscroft - a trading name of A Vartan Limited Veritas Asset Management (UK) Ltd Walker Crips Stockbrokers Waverton Investment Management W H Ireland Ltd Whitefoord LLP Wise Investment *A trade name of Raymond James Investment Services Ltd ** A trade name of James Brearley & Sons ***Trade names of Smith and Williamson

79 firms are associate members who do not deal directly for the private investor but share the aims of the WMA community. Our current list of associate members is as below:

FNZ UK Ltd FTI Consulting Goal Group Ltd Herbert Smith Freehills HITEC Huntswood Infront Invesco Asset Management Investment & Wealth Management Consultants Ltd IRESS Jersey Finance JHC Systems Ltd JLT Specialty Knadel Ltd KPMG LLP Kroll Associates UK Lark (Group) Ltd Lloyd’s Lloyds Banking Group London Stock Exchange Maclay Murray & Spens LLP Marshall Walker Associates Ltd Morningstar UK Ltd Norton Rose Fulbright LLP Objectway Financial Software Peel Hunt Pershing

Platform Securities Profile Software RBC Investor & Treasury Services Trust (UK) Royal Bank of Scotland – Financial Institutions Group Royal Bank of Scotland Sharedealing RPC Salesforce Sales Kinetics SEI Shore Capital Group Limited SimCorp Coric Social Stock Exchange Societe Generale Securities Services Synpulse UK Third Financial Software Toro Risk Solutions Travers Smith LLP TRMG Vanguard Asset Management Vermilion Software Wealth Dynamix Wealth-X Willis Towers Watson Plc Winterflood Securities Ltd WisdomTree Europe Ltd Worksmart

As at 31st May 2017

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INFLUENCE 10

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WMA membership of external Committees and groups 2016 -17 External Committees and Groups

All Party Parliamentary Group on Wholesale Financial Markets & Services Anti - Money Laundering Europe (AME) The Cross-Border Regulatory Forum (CBRF) Centre for the Study of Financial Innovation (CSFI) CISI Examinations Review Board CISI Accreditation Committee CISI European Regulatory Forum Committee (ERF) City of London IRSG Experts & Engagement Group City of London IRSG Experts Sub-Group on MiFID City of London IRSG Experts Sub-Group on Retail Investment City of London IRSG Experts Sub-Group on Data Protection Euroclear UK & Ireland Second Stage Settlement Discipline Appeal Committee Euroclear UK & Ireland Stock Events Working Party Euroclear UK & Ireland Market User Group European Retail Financial Forum (ERFF) Financial Futures Forum Europe (FFF) FIA Implementation Handbook Steering Committee FOS Industry Liaison Group FSCS Industry Advisory Group FSCS Funding Review – Industry Advisory Group FCA CASS Review Advisory Committee FCA Trade Association Coordination Committee (TACC) FCA Practitioner Panel FTT Joint Trade Association Working Group HMRC Common Reporting Standard (CRS) Working Group HMRC SDRT/Stamp Duty Working Together Steering Group HMRC VAT Finance Liaison Group Industry Associated Parliamentary Group (IAPG) International Capital Market Association (ICMA) - Cross Affiliation TheCityUK International Regulatory Strategy Group (IRSG) & Council Investor Relations Society Best Practice Partners Joint Money Laundering Steering Group (JMLSG) Joint Trade Association Group (JTAG) ORB Consultancy Group Professional Standards Advisory Group QCA Secondary Markets Expert Group Smaller Investment Banking Group Takeover Panel Settlement Discipline Regime Working Group UK Platform Group

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Influence 2016 31st May 2016 WMA bulletin

14th July 2016 WMA bulletin

26th May 2016 Investment industry calls for input on improving fund trading and settlement

16th June 2016 WMA bulletin 24th Jun 2016 WMA responds to Brexit vote

29th June 2016 WMA bulletin

8th Sep 2016 WMA Fintech Conference 2016: Evolution, not revolution?

26th July 2016 WMA bulletin 20th September 2016 WMA bulletin 10th August 2016 WMA bulletin

23th August 2016 WMA bulletin

1st Sep 2016 WMA Selects MSCI for Private Investor Index Series

4th October 2016 WMA bulletin

19th October 2016 WMA bulletin 2nd November 2016 WMA bulletin

10th Nov 2016 WMA Summit 2016 - Promoting a Culture of Investment

7th Oct 2016 Wealth Management Association welcomes Lady Barbara Judge to their Women in Wealth Forum

16th Nov 2016 WMA bulletin

6th September 2016 WMA bulletin

WMA in the media Media Coverage

693 total pieces of coverage across different types of publications (2016/17)

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Bulletin

Press releases

2017 23rd Nov 2016 Autumn Statement: WMA welcomes the Government review of Stamp Duty on Share Transactions

6th Dec 2016 WMA bulletin

12th Jan 2017 WMA bulletin

17th Jan 2017 WMA Welcomes PMs Brexit Pledge to Ensure Smooth Transition 24th Jan 2017 WMA Welcomes PMs Brexit Pledge to Ensure Smooth Transition

27th Jan 2017 WMA Welcomes PMs Brexit Pledge to Ensure Smooth Transition

1st Feb 2017 UK Private Banking & Wealth Management Supports Economy 8th February 2017 WMA bulletin

24th February 2017 WMA bulletin 28th Feb 2017 Treasury’s redefinition of financial advice will enhance investor protection, says WMA

1st Mar 2017 WMA gathers MIFID II experts in sell-out conference as January implementation deadline looms 2nd Mar 2017 New MSCI WMA Private Investor Index Series now live 22nd March 2017 WMA bulletin 29th Mar 2017 WMA to Continue Supporting Members as Brexit Negotiations Get Underway

22th April 2017 WMA bulletin

2nd May 2017 WMA bulletin

5th May 2017 WMA bulletin 8th May 2017 WMA to Continue Supporting Members as Brexit Negotiations Get Underway

18th May 2017 WMA bulletin 19th May 2017 GDPR gurus gather together at WMA Conference ahead of 2018 deadline 31st May 2017 WMA & APFA members vote to create Personal Investment Management & Financial Advice Association

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Consultation responses Sent to

Subject area

2017 May

Art. 29 Working Party

EU Regulation

2017 May

European Commission

EU Regulation

2017 May

DCMS

UK Regulation

WMA response to ICO consultation on profiling and automated decision making

2017 April

ICO

UK Regulation

WMA response to JMLSG part I

2017 April

JLMSG

UK Regulation

2017 April

FCA

UK Regulation

2017 April

HMT

UK Regulation

2017 March

Financial Services Compensation Scheme

UK Regulation

2017 March

ICO

UK Regulation

2017 March

European Commission

EU Regulation

2017 February

European Banking Authority

EU Regulation

2017 February

Department for Business, Energy & Industrial Strategy

Operations and Tax

FCA: WMA response to CP 16/29 MiFID II implementation

2017 January

Financial Conduct Authority

UK Regulation

ESMA: Consultation on product governance guidelines

2017 January

European Securities and Markets Authority

EU Regulation

FCA: Mission Consultation

2017 January

Financial Conduct Authority

UK Regulation

HMT Consultation on the transposition of 4MLD

2016 November

HM Treasury

UK Regulation

HMRC Consultation document - Making tax digital - transforming the tax system through the better use of information

2016 November

HM Revenue & Customs

Operations and Tax

FCA: WMA response to CP 16/19 MIFID II implementation

2016 October

Financial Conduct Authority

UK Regulation

2016 October

HM Treasury

UK Regulation

CP16/18 - changes to Handbook disclosure rules to reflect PRIIPS

2016 September

Financial Conduct Authority

UK Regulation

EIOPA: PRIIPs letter to Tim Shakesby

2016 August

European Insurance and Occupational Pensions Authority

EU Regulation

HMT: Call for Information on AML Supervisory Regime

2016 June

HM Treasury

UK Regulation

ESAs: Letter regarding PRIIPs

2016 May

European Supervisory Authorities

EU Regulation

FCA: WMA response to DP16/2: CASS 7A & the special administration regime review

2016 May

Financial Conduct Authority

UK Regulation

Consultation title WMA response to Article 29 WP DPIA Guidance WMA response consultation on ESAs WMA response to DCMS call for views on GDPR de-rogations

WMA Response to FCA Consultation on PEP Guidance WMA response to HMT Consultation on MLR WMA Response to CP 16/42: reviewing the funding of the FSCS WMA Response to ICO Consultation - GDPR Consent Guidance European Commission: WMA response to CMU mid-term review 2017 EBA: New Prudential Regime for Investment Firms BEIS: WMA Response to Green Paper - Corporate Governance Reform

HMT Regulated Advice CP

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Date

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The WMA on Social Media

Twitter Twitter Followers

Male to female Followers

Total number of WMA impressions by quarter 40,000 35,000 30,000

1,152

25,000 20,000

63%

37%

15,000

Q1

Q2

Q3

Q4

LinkedIn

in

Visitor demographics

1,060

Senior (35%) Manager (18%) Entry (15%) Director (10%) Training (8%)

Followers

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POLICY Key Policy Achievements

EU •

•

•

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The WMA set out the concept of a 3 phase approach to Brexit – the current period, transition, and final EU/UK agreement – in papers for Government, Bank of England, Regulators and others early in the autumn of 2016. We were the first to do so. The Bank Governor, Mark Carney, picked this up in a speech 6 weeks later and it has since become Government policy.

We argued in the same documentation that transitional arrangements should leave market access arrangements, regulation and related matters as close to the status quo as possible to allow time for further negotiation when the UK was outside the EU. This would allow a period to think through and accommodate necessary change, ensure a smooth and organised transition to any different régime, and create a onestop Brexit without multiple changes for firms already beset with MiFID II and other new legislative requirements. These views were taken up by others and have subsequently become mainstream Government thinking.

The Qualified Investor route as a means of incentivising the issue of corporate bonds in denominations suitable for retail investors has been inserted into the Prospectus Regulation following sustained pressure by WMA along with the London Stock Exchange. In the medium to long term it is anticipated that this will bring benefits to the retail investor.

•

The growing focus of the European Commission on the role of specialised investment intermediaries and better intermediation to strengthen retail investment in the capital markets and reduce the quantity of private savings in idle bank deposits has been instigated partly by sustained WMA argument and pressure.

•

The European Banking Authority and European Commission proposals for a prudential régime specifically tailored to the needs of investment firms and to apply instead of the CRD/ CRR, which was designed mainly for large banks, have been brought forward because of careful, detailed and coordinated work by the FCA and WMA. Firms should benefit from this more proportionate and better tailored approach in the period between now and 2021

•

Working with the FCA to persuade relevant EU authorities to terminate the application of the Capital Requirements Directive and Regulation to investment firms and developing new prudential proformas taking account of their specific character, adapting to the fact that they are not systemically significant banks.

UK Regulation MIFID II Transaction Reporting Legal entity identifiers (LEI) - FCA established a webpage setting out the obligations to obtain a LEI. Client identification – following lobbying, guidelines changed so that firms do not have to sight client’s passports

Product governance •

We were the only distributor body who came to see ESMA for issues other than target market. ESMA has now recognised : · Proportionality when it comes to data flows - No negative market for simple, mass market products, so no reporting needed · Importance of reference to the portfolio as a whole in discretionary portfolio management – when designing a portfolio and using hedging techniques

•

Investment trusts – FCA has maintained their view in stating that investment trusts are not automatically complex

•

Algorithmic trading – FCA recognised that firms using third party algorithm to receive and transmit orders to the same third party are not caught by algorithmic trading rules

•

Best ex – FCA agreed with the reporting protocols we established in respect of the reporting of bulk orders.

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Financial Crime •

• • •

The General Data Protection Regulation (GDPR) came into force on 4 May 2016, and the implementation date is 25 May 2018. PIMFA is actively supporting its member firms in their implementation of GDPR by facilitating dialogue, participating in external focus groups and responding to consultations. Here is what we have done so far:

Engagement with IRSG Data Workstream – including meeting with DCMS GDPR working group – an ongoing forum, open to the whole membership.

Response to the following consultations, published by Government and EU and UK regulatory bodies: · ICO consultation on consent guidance · ICO feedback request on profiling and automated decision-making · DCMS consultation on GDPR derogations · Art. 29 Working Party consultation on Data Protection Impact Assessment · All consultation responses are published on our website

•

• • • • • •

GDPR Conference 18 May 2017 – this was a specialist conference on data protection-related issues. It was well received with member firms Continuing engagement with Financial Crime Committee Continuing engagement with JMLSG Engagement with HMT and FCA on the implementation of 4MLD Response relevant consultations Response to members’ad-hoc queries Financial Crime conference

Operations and Tax •

Working closely with the FCA and Euroclear UK & Ireland to produce Q&A for member firms in respect of the requirement under Article 38(5) the CSD Regulation for CSD Participants to offer the choice of omnibus and segregated accounts to their clients.

•

Continued representation on the Bank of England Working Group, and on the separate Trading and Settlement Taskforces, to seek to ensure that the settlement discipline and buying-in rules in the CSD Regulation limit the impact on the Retail Service Provider (RSP) Model.

Ensuring member firms’ interests were taken into account as the industry responds to the FCA’s request to improve customer outcomes in respect of pension and asset transfers and re-registrations.

Ensuring that the recommendations of the Dormant Assets Commission to the Government were sufficiently flexible in respect of wealth management.

•

•

•

Working with member firms to produce a set of tax simplification proposals that would benefit member firms and their clients.

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EU Capital Markets Union Mid-Term Review

Prospectus Regulation

Not with standing the Brexit referendum and associated developments, EU financial services issues have maintained their importance to the WMA during the last reporting year.

The Commission’s strategy in relation to the Capital Markets Union (CMU), European supervisory structures, and Fintech have been of particular significance. The advent of Alex Merriman half way through the year beefed up the WMA’s outreach on EU issues, which continues to be supported by the work of Cicero Group, while Brexit was consuming other resources.

The Prospectus Regulation will reform the European prospectus regime to make it simpler, faster and cheaper for companies to raise money in the capital markets. Of particular significance for our members are the new retail bond market rules, which currently place restrictive barriers to retail participation in EU corporate bond markets through the €100,000 bond denomination threshold for the retail prospectus exemption.

As well as responding to consultations on the three themes just mentioned, an essential focus has been – through repeated visits to the Commission and meetings with MEPs – to continue to place the WMA as the Association most able to offer practical, and targeted advice and research on the distribution of retail financial services through a range of investment intermediaries. We have also maintained our founding membership of the European Retail Financial Forum, or ERFF, in Brussels which is gradually growing into an organisation that carries the discussion at the retail end of the market on behalf of a wide range of EU interests into the European Commission and Parliament.

The Commission has concluded the Level 1 process for several key pieces of legislation that have been legacies from the period when Michel Barnier (now negotiating Brexit) was Internal Market Commissioner. The Prospectus Regulation, Money Market Funds Regulation, Shareholder Rights Directive, and Benchmarks Regulation were all published in the Official Journal of the EU in the reporting period and are commented on in the next column.

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The new final text includes a compromise, proposed by the PIMFA in conjunction with the London Stock Exchange Group (LSEG) and others, in which issues may be made in any denomination to Qualified Investors (which includes discretionary investment managers, or DIMs) under wholesale market arrangements, thus offering an alternative to the €100,000 threshold. This approach means that small denominations useable for retail investment can be issued without the retail paraphernalia previously required, and, although the retail investor cannot directly participate in the offerings, they can be bought by DIMs for their clients if the offer is suitable.

Retail investors are thus protected through the compulsory intercession of an authorised intermediary but at the same time can gain access the bond market in a manner that was impossible before. The PIMFA will continue to engage closely with ESMA and the FCA as they produce more detailed rules and guidance over the coming year. The new rules will apply in the UK from 21 July 2019.

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Money Market Funds Regulation

Shareholder Rights Directive

The Money Market Funds Regulation (MMFR) introduces new rules on the use and structure of money market funds. New conditions will be placed on the MMFs’ portfolio structure, a ‘know your customer’ rule is expected to help MMFs better predict substantial redemptions, while new valuation rules are designed to increase transparency. This will make such funds more suitable than hitherto for retail investment, although not a lot of this is expected. The Regulation will apply from 21 June 2018, but the main provisions will only come into effect from 21 January 2019.

The new Shareholders Rights Directive (SRD II) reviews existing rules with the aim of strengthening shareholder engagement in listed European companies. The Directive seeks to create a better link between pay and performance of company directors, enhance shareholder oversight on related party transactions and facilitate transmissions of cross-border information across the investment chain. The SRD II will apply from 21 July 2019, giving members two years to prepare for the new rules. These changes will be relevant to PIMFA members and the PIMFA will be monitoring further developments and preparing relevant material for members’ use in due course.

Benchmarks Regulation

New Prudential Regime for Investment Firms

The Benchmarks Regulation (BMR), which seeks to rectify issues identified as a result of the LIBOR interest rate manipulation scandals of a few years ago, became EU law in June 2016. It introduces definitions of a benchmark, identifies the role of different organisations and individuals in its manufacture, administration, use, and publication, and sets out a number of conditions that must be met by the various parties at each stage of the benchmark creation, dissemination and use process in order to prevent future manipulation of any kind, including that found in the LIBOR case.

The European Banking Authority is developing plans to design a new prudential regime specifically tailored to the needs of investment firms. The existing capital requirements legislation does not take into account the risks inherent in the business models operated by such firms. The legislative initiative bears the potential to introduce significantly lighter and less complex prudential treatment of wealth managers, so long as the new regime is developed proportionately. PIMFA has followed the initiative closely, responding to the EBA discussion paper and attending a public hearing to provide feedback on the proposals. The EBA plans to publish its final recommendations in September 2017, which in turn will inform the legislative proposal that the European Commission is expected to publish by the end of the year.

The WMA followed these developments closely and PIMFA will continue to do so, in particular in assessing whether the PIMFA/MSCI retail indices will fall under the new Regulation and the implications of this if they do, and in advising member firms on the relationship of the BMR to their own internal indices for measuring fund performance and other uses. At the time of writing we await the Commission’s Delegated Acts, or Level 2 Regulation, fleshing out what the market must do to comply. ESMA submitted its recommendations on this at the end of March 2017. The Regulation will come into effect on 3rd January 2018 along with MiFID II/MiFIR and PRIIPs.

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THE EU AND BREXIT

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The reporting period relates to the WMA and does not include the WMA/APFA merger of 1 June. It should however be recorded that in the months immediately preceding the merger the WMA began the process of realigning its EU work to reflect the anticipated organisational changes.

This involved bringing this business under a new public policy framework which also includes the reinforced approach to UK Government relations that WMA and, since 1 June 2017, the new Association, have been undertaking.

WMA/PIMFA’s upstream UK and EU policy and legislative operations have thus been brought together in a seamless structure, which will be increasingly important in establishing coherent positions across the board in the Brexit universe. There will be consequential changes, such as to the European and International Strategy Committee of the Board which will be reorganised into a Committee focusing on public policy. But this change and the outcomes of these alterations overall will be covered in more detail in the next Annual Review

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The last year has seen two major strategic realignments in EU financial services policy, with Europe’s financial capital set to leave the EU following the Brexit referendum and the European Commission reviewing and updating its Capital Markets Union project. In the future, PIMFA’s broader membership base and reformed internal structure will ensure that we can continue to engage effectively with policymakers and regulators in the UK and Brussels on these issues.

The UK’s decision to withdraw from the EU has been the overarching factor shaping the work of the WMA and other financial services associations in London and elsewhere over the last year. The 23 June 2016 referendum vote and its political aftermath abruptly altered the direction and flow of upstream policy and regulatory work and involved a major redirection of resources within the WMA. The first part of the reporting year was taken up by building a consensus among WMA member firms on the implications for them of Brexit and preparing material for the Government, especially the Treasury, DEXEU, and DIT, explaining our key issues and their implications. Much of this early activity, including the detail of the 6 policy areas we asked the Government to focus on, was described in our article on “Brexit: The Impact of Brexit: WMA Member Interests” in last year’s WMA Annual Report so it is not repeated here.

However, following that work we launched a stream of action involving on the one hand a series of calls on relevant

Government Departments to explain and elaborate on our Brexit proposals, and on the other the development of joint follow-up work with other trade associations in the financial services sector to explain to Government the situation and our preferred outcomes. We also distributed material to and discussed matters with the FCA in the same vein.

As expected, in the joint work with other associations there has been a high degree of overlap in the concerns held, although some variation in the priorities attached to each element. In investment banking, for example, passporting rights to do business out of the UK across the EU has been primary, and equivalence determinations following Brexit in order to enable retention of at least some of these rights has been a paramount demand. But in the WMA sector passporting has been less of an issue overall since many firms have no or very few clients in other EU member states and no more than about 5% of WMA members’ clients overall are there. And when dealing with retail or private clients, equivalence for a non-EU country is in any case not available since in these circumstances firms must in general operate from an entity in the EU member state in which the retail clients live. So neither passporting nor equivalence ranks as highly in the WMA part of the financial services industry as in others.

There is a range of examples of this kind of variation in significance attached to different aspects of the financial services processes by those undertaking such business in the EU. Perhaps the most serious relates to the location

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of clearing arrangements for euro-denominated contracts.

This is essentially a wholesale market matter involving risk management on a global scale that is also of considerable significance for the UK generally and the City of London in particular. It has received much media attention and if the business leaves London the impact on global risk management will be hard to calculate. So will the effect on the scale of future financial operations in the City, the damage to UK employment, and the reduction in the Government’s tax take. Yet it has overall not been an issue of direct concern to most WMA firms (excluding the retail market makers) because the predominance of the retail service provider model in on-exchange dealing for our sector puts clearing issues at one stage removed.

Broadly speaking the UK wealth management industry will have to make some adaptation to the consequences of leaving the EU, but for many WMA firms these are negligible and the amount of required change to business practices will be nugatory. Indeed, for some of these firms the key question has been whether there should and can be any kind of ‘regulatory dividend’ from Brexit. This does not imply a lowering of standards but rather a retargeting of regulatory approaches to suit the structure of the UK wealth management industry better. This would involve removing or changing some of the elements inserted into EU regulation to meet issues arising from the different types of firm and business models prevailing in the continental retail investor sector. The aim would be to make regulation more efficiently tailored to UK market requirements.

We have made the Government and FCA aware of this kind of interest, and overall we have broadly categorised the UK wealth management sector as at low risk from Brexit, although that does not apply to the minority of WMA firms with exposures to a larger EU client base. In these cases firms are looking carefully at what operations they already have in other EU countries and making changes to business functions accordingly so that panEU activity can continue after Brexit occurs. They support a continuation of EU regulation rather than any conversion to a more UK-specific approach.

The two biggest Brexit issues for the WMA sector as a whole have been to ensure post-Brexit the maximum continued access to the widest possible pool of skilled labour, and continued straightforward access to funds in which to invest for clients.

The first of these relates to policy and agreements reached at governmental level on migration issues and the free movement of labour. We share common cause in this area with all other sectors of the financial services industry and have made our collective views well known to the Government.

The second is set in the context of how the domicile and management of funds, especially those such as UCITS which are suitable for retail investment, will operate when the UK is out of the EU. It is not yet clear that delegation of fund management back to UK-based managers of funds domiciled elsewhere in the EU will be permitted, nor that UK-domiciled funds currently called UCITS – which will not be able to be designated as such after we leave – will remain domiciled in the UK. If there is disruption to the current patterns of fund domicile and management as a result of Brexit, there may in future be additional costs and difficulties associated with investing in them. The WMA (PIMFA) will be seeking clarification of this situation in due course.

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The WMA’s contribution to the collective efforts of the City to inform the Government of industry requirements following Brexit has been substantial. In the second half of 2016 we began by contributing materially to the Oliver Wyman study that informed the first TheCityUK (TCUK) generic input.

Subsequently we worked mainly through the International Regulatory Strategy Group (IRSG), run jointly by TCUK and the Corporation of London, to provide information about retail aspects. But we also exchanged views informally with colleagues in the Joint Trade Associations Group (JTAG) and sit on the Trade Association Consultative Committee, run by the FCA, where views on Brexit-related issues are sometimes sought. This collective approach was requested by Government, especially Treasury, to ensure the material carried weight in Whitehall and Westminster and was not fragmented between many independent interests all saying the same thing in different ways. Indeed in the first 5 months of 2017 this became the WMA’s main method of communicating documentation, although we also spoke independently to government officials both in bilateral contexts and in joint meetings with other associations.

To indicate the extent of our engagement in the Brexit processes it may be noted that we are members of the IRSG Council and its executive arm, the Experts and Engagement Group. We have participated in its working groups on Data Protection, Third Country issues for the EU and UK, Global Competition and the UK markets post-Brexit, Regulatory Coherence between the UK and the EU after leaving, and the Great Repeal Bill. These groups have on occasion created sub-groups or working parties in which we have participated, and we have been able to make use of information and insights gained through the work both directly for members in our discussions with Government and the FCA and indirectly in public presentations at conferences.

We will continue with this activity as PIMFA in 2017 and 2018.

Meanwhile WMA work in relation to EU business in London, Paris, Brussels and Frankfurt continued in the last year, proportionate to the non-Brexit legislative and regulatory material being produced. It should be recalled that the UK is in the EU until we are out, which entails all the existing rights and obligations of membership. Reflecting the change in emphasis we secured additional consultancy support from Alex Merriman on a 6-days-a-month basis from January 2017 to maintain the Brussels runs and work with the European Supervisory Authorities as needed. This included a visit to Frankfurt to speak to EIOPA about PRIIPs and work with the EBA in London on the prudential régime for investment firms. There has also been ongoing work with ESMA on a variety of subjects, including the continuing Level 2 work on MiFID II/MiFIR. The additional support has freed up resources for domestic public policy work on Brexit issues as outlined above and PIMFA will keep the resource situation in this area under review in the light of work to be undertaken for members in the next reporting year now beginning.

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UK Regulation Markets in Financial Instruments Directive and Regulation – MiFID II

MIFIDII continued to be the major focus of our work during the year.

Firms will be aware that MIFIDII is a very difficult project; much of the material is being published very late given an implementation date of 3rd January 2018 and further material has yet to be published.

Working groups reviewed a broad range of topics and, in collaboration with our member firms, we have begun to produce a series of ‘bibles’ by topic. Each bible provides further explanation on the regulatory obligations firms are expected to meet and provide feedback on our industry’s collective view on certain issues. Bibles are ‘version controlled’ and they are updated as further information becomes available, such as the publication of Q&As by ESMA.

We have repeatedly raised concerns that there is no published ‘root and branch’ review as why major compensation claims have arisen and what action FCA can take (in terms of its supervisory work) and industry to mitigate future claims. Whilst we do not advocate a ‘no default’ supervisory regime we are concerned that the ongoing high level of claims is seen a “business as usual”and greater consideration must be given to mitigating potential claims. We are will review the Policy Statement on FSCS following publication in the summer and we would anticipate further engagement with the FCA on this issue.

We are very grateful for the time and feedback we have received from individual members of the working party. A number of meetings have been held with FCA policy staff who have provided assistance wherever they can, but it needs to be noted that FCA cannot give further guidance on European guidance so in many instance firms need to exercise their own judgment on specific issues. Wherever possible, we hope the content of our bible will assist firms in making their judgement.

We, in conjunction with a number of other trade associations, have had a number of discussions on the application of the unbreakable term deposit rule and the ability of firms to place client money. FCA have confirmed that firms can apply for waivers to the rules.

We have endeavoured to ensure we actively engage with firms on MIFIDII. We have established a dedicated section on our website with supporting material, we provide a MIFIDII project report in each edition of Update and we have met with firms on a one to one basis throughout the year. We held a conference on MIFIDII in February which was attended by over 200 people, including non-members.

MIFIDII will continue to be a major focus of our work next year and we would anticipate that a number of our working parties will continue beyond the implementation date of 3rd January 2018 as there are a number of areas where we will wish to monitor issues arising in the post implementation phase.

Financial Services Compensation Scheme

We engaged with the FCA both before and after the publication of CP 16/42 – Reviewing the funding of the Financial Services Compensation Scheme. Many of the key issues addressed in the review of the funding model had also been considered in past reviews. Issues such as ‘risk reflectiveness’ and affinity of classes have been the subject of extensive discussions in the past. The fundamental issue is the ongoing high level of compensation payments.

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CASS – Unbreakable term deposits

Designing a new prudential regime for investment firms

We have met with FCA to discuss this issue which is the start of the work which should lead to a new prudential regime for investment firms. We submitted a response to the EBA and this issue will continue to evolve next year.

Financial Advice Markets Review - FAMR

We participated in a number of meetings on this issue and submitted a response. Action has begun to implement certain of the proposals and we will continue to monitor the position next year.

Packaged retail and insurance-based investment products – PRIIPs

In November 2016, the Commission announced a one year delay in the implementation of PRIIPs, effectively bringing it into line with MiFID II. While this move was both welcome and necessary, there is still much about the operation of the PRIIPs regime that remains unclear, particularly as regards how KIDs are delivered by firms distributing KIDs. We have met with EIOPA to make them aware of a wide range of KID distribution issues and continue to press for the Level 3 Q&A to progress beyond the technicalities of preparing the KID.

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Financial Crime New EU Directives and Regulations

New anti-financial crime regulation includes the Market Abuse Regulation (MAR), which came into effect in July 2016. It is interesting to note that those parts of MAR that are dependent on MiFID II have delayed implementation dates and will become effective in January 2018. The Fourth Anti-Money Laundering Directive (“4AMLD”) was published in the EU’s Official Journal in June 2015, and the related statutory instrument, the Money Laundering Regulations 2017, will come into effect in June 2017.

HMT has published a number of consultations on the transposition of a 4MLD and on the draft text of the statutory instrument, which WMA has responded to.

The FCA is producing new guidance on Politically Exposed Persons (PEPs), which WMA has contributed to by replying to the related consultation and by a face-to-face meeting. The Joint Money Laundering Steering Group (JMLSG) is also updating their guidance with the content of the new Regulation. The WMA remains an active member of the JMLSG at both Board and Editorial Panel levels. EU institutions are currently discussing the adoption of an amendment to a 4MLD, which, if agreed, is expected to come into force next year.

WMA has engaged with HMT and FCA on these issues by means of consultation responses, face-to-face meetings, correspondence, regulatory analysis and ad hoc views, and with member firms through the Financial Crime and Regulatory Committees and by providing advice to firms requesting it on specific issues, such as the FCA’s MAR rules or the implementation of the Money Laundering Directive. Our work on regulatory developments and implementation is ongoing and members are welcome to visit the financial crime section of the website for regularly updated content and to continue to contact us for advice, comments and views.

A chance to debate and hear from the experts - WMA financial crime conference

The WMA’s annual Financial Crime Conference on 26 January 2017 was an opportunity for delegates to interact with experts in the areas of financial and economic crime, including representatives of the FCA and of the ICO, as well as experts from legal, business consultancy and security firms. The feedback we received was very positive, those who attended the conference found it both educational and entertaining, and we are already planning next year’s edition, which will take place in January 2018. Details of the programme and of how to attend will be posted on the WMA website in due course.

Helping firms to win the battle

We are continuing to produce, in conjunction with Mark Johnson, periodical user-friendly material on cybersecurity that are now available on our members’ section of the website. This includes the comic strip “Hacker Girl”, whose episodes are available to read in the cyber security section of our website. Moreover, there will be a cyber security panel at our Fintech Conference in September 2017, where representatives of member firms will discuss future threats that may arise with the introduction of new products and services. Details of the programme and of how to attend are available on the WMA’s website.

Financial crime continually evolves and there is no risk-free approach.

We as an industry have a duty to do whatever is in our power to help prevent it and the WMA continue to support members with practical assistance, analysis, forums for debate and collaboration with key bodies.

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Operations and Tax Automatic Exchange of Information

The first reports under the OECD’s Common Reporting Standard (CRS) were required to be sent to HMRC no later than 31 May 2017 covering the calendar year (2016). This was in addition to the ongoing US FATCA reporting and that required under the UK-Crown Dependencies and Overseas Territories Agreements.

WMA ran a series of seminars for members in London, Edinburgh, Glasgow, Liverpool and Manchester in early 2017 which focused specifically on the additional requirements in respect of Trust reporting under the CRS. The seminars were undertaken in conjunction with Deloitte, KPMG and Elly Crockford from HMRC also spoke at each event.

US Qualified Intermediary Agreement

On 4th January 2017 the US Internal Revenue Service (IRS) published the final version of the new Qualified Intermediary (QI) Agreement.

The seminars referred to above also included a session on the new QI Agreement focusing on a number of areas including the enhanced compliance programme, requirements and responsibilities of the QI’s Responsible Officer, and the role of the Independent Reviewer.

One-off Client Notification in respect of Offshore Accounts As well as working with HMRC in advance of the legislation being formalised in September 2016, WMA provided updates to member firms on the requirement to write to clients to remind them of their tax obligations in respect of any offshore accounts. HMRC provided prescribed wording for the notification which must be sent to relevant clients no later than 31 August 2017.

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Tax Simplification

In the summer of 2016 WMA formed a small working group of member firms to formulate proposals to simplify tax and tax administration for both member firms and their clients at no or very little cost to the Government. The Working Group also met with the Chairman of the Office for Tax Simplification and on 10 November 2016 WMA wrote to the Chancellor setting out our key proposals.

These were as follows: • The removal of the quarter-up requirement for probate valuations (to bring it in line with the pension valuations which returned to mid-price in 2015).

• Extension of the abolition of income tax withholding to all interest payments and the corresponding abolition of CT61 Returns.

• Clearer guidance in respect of Structured Products to ensure correct tax treatment of the income.

• Removal of the requirement to have to retrospectively amend a CTV when new information comes to light in the following tax year.

• Simplification of the Offshore Reportable Income requirement for collective investment funds.

• Updating the rebasing date from 1982 in respect of CGT. • Abolition of Group 1 and Group 2 units for collective investment schemes (e.g. OEICS, unit trusts etc).

• Simplifying the tax treatment for holding accumulation units in collective investment funds.

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Beneficial Shareholder Rights & Dematerialisation

CSD Regulation

Beneficial Shareholder Rights

Daily Cash Penalties for Settlement Fails

In November 2016 the Department for Business, Innovation & Skills (BEIS) published a Green Paper on corporate governance reform which included a section on shareholder engagement and potential solutions to facilitate or encourage individual retail shareholders to exercise their rights on pay and other corporate decisions.

One of the options in the Green Paper was to amend the Companies Act 2006 to require brokers to offer underlying investors the option to opt into voting and wider information rights, something WMA had proposed in March 2015.

As well as discussing the issue with the lead policy official at BEIS, WMA responded to the Green Paper stressing that the Government needed to be mindful of costs in view of the small numbers of investors who wish to receive company information and to vote.

As an alternative WMA suggested that the Government should consider introducing a Code of Best Practice in this area. We await the Government’s feedback statement.

WMA continued to participate in the Bank of England Working Group that is looking at the practical implementation of the mandatory buying-in regime and application of daily cash penalties for failed settlement instructions on intended settlement date. WMA was also involved in the separate Trading and Settlement Task Forces chaired by Euroclear UK & Ireland and the London Stock Exchange respectively. Unlike the rest of the CSD Regulation, the buying-in and settlement discipline aspects are not due to take effect until sometime in 2019.

Article 38(5) – Account Segregation

Dematerialisation

WMA has liaised closely with both the FCA and Euroclear UK & Ireland (EUI) to better understand how member firms can comply with Article 38(5) of the CSD Regulation, the requirement for CSD Participants to offer their clients the choice between segregated and omnibus accounts. We await further information from EUI in its consultation paper due to be published in July 2017 but in the meantime we are preparing Q&A and a document outlining the pros and cons of both segregated and omnibus accounts for member firms.

Dormant Assets

Asset re-registration and transfers

WMA continued to participate in the industry Dematerialisation Steering Group (DSG) looking at the proposed “industry model” for replacing share certificates with shareholder reference numbers. The DSG includes BEIS officials, and representatives from the registrars, issuing companies, brokers and Euroclear. The last meeting took place on 1 March 2017 and since then the Government has announced that work on dematerialisation will be put on hold until 2019.

The WMA continued to be involved in the Dormant Assets Commission’s Investment Management Working Group as it considered the issues in respect of expanding the current dormant accounts scheme to asset classes such as equities and funds. The Dormant Asset Commission published its recommendations in March 2017 and we await feedback as to how the Government wants to proceed.

WMA remained actively involved in the Transfers and Re-registration Industry Group (TRIG), a working group of representatives from the main pension and investment trade associations which is looking at ways to improve customer outcomes in respect of pension and asset transfers and re-registrations. This follows a request from FCA to do so in March 2016. Following an industry consultation in December 2016 further workshops are being held to help take the various proposals forward.

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EVENTS 28

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Events

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Events Review In answer to the needs of our members, WMA provided instrumental events programmes in support of our work in key industry areas such as governance, financial crime, operational and regulatory risk. Our flagship event, the WMA Annual Summit, took place in November 2016 which received extremely positive feedback overall.

The extensive programme of 70 events (61 of which were free for members) were successfully delivered by the team, offering a total of over 100 hours continuing professional development (CPD).

In 2016/17, we introduced a number of new initiatives ensuring our events programme continued to evolve and diversifiy. Such initiatives included that of the engagement of Millennials within the industry, and the effect of MiFID II to our member firms.

These sell-out events, ranging from professionally accredited to informal networking, have successfully provided a platform for our members firms to address and share their forefront expertise on issues that directly impact on their businesses.

The growth and development of our events programme will continue into 2017/18, as we plan to expand our Women in Wealth initiative nationally, and fundamental topics for our new financial adviser members.

We look forward to exploring new event initiatives in support of our members and the personal investment management and financial advice community, which proves for an exciting year ahead.

What’s coming for 2016/2017 • Industry Webinars • Expanded National Events programme • Fintech Conference • CEO Dinner

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WMA Testimonials

I thought that the day was very well staged, that Daisy McAndrew did an excellent job and that the subject matters were diverse sufficiently to retain everyone’s interest coupled with being very topical in nature.

David Hannis, Executive Director, James Brearley & Sons

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How many conferences are there in this industry with rich content not only from wealth managers, but also technologists, politicians, regulators and influencers? The WMA Summit is the only one in the UK and one of the few around the world’ Mohammed Marikar ARCS, Associate Director, Market Intelligence, RBC Wealth Management

Great event, the WMA always delivers consistent quality.

I can’t wait for the next one!.

- Peter Lancos, Chief Executive, Exate Technology

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Regional events

International

North East Northern Ireland

Reppublic of Ireland

2%

Midlands

1%

4%

North West

3%

Isle of Man

8%

Scotland

East Anglia

3%

London

7%

3% 24%

South West

2% Jersey

1%

2%

Regional events breakdown The WMA Regional Briefings series consisted of 30 events this year, offering a total of 45 CPD hours.

These country-wide events continue to provide our firms with: • • • •

updates on current and future regulatory, operational and business issues affecting the industry updates on work PIMFA are undertaking opportunities to network with industry peers option to feedback to PIMFA policy experts on other issues affecting you

• We recently conducted a survey asking member firms what other events you would like us to offer.

The feedback told us that National Conferences and Webinars are of real interest to firms and as such we will be rolling out a series of PIMFA National Conferences and Webinars in q3/4 2017 while continuing with our standard briefings.

Further details on these events will follow in due course and will look to further engage with our increased membership through-out the UK and Ireland.

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Types of event

Briefings (49%) Seminars (39%) Conferences (10%) Networking events (3%)

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With thanks to our sponsors throughout the year!

As at 31st May 2017

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Membership The 2016/ 2017 membership year saw the recruitment of 9 new full member firms and 15 associates with new revenues of over ÂŁ135 000.

The pipeline continues to be strong with continuing growth expected. Following our June merger with APFA, PIMFA now encompasses the entire financial planning market from single entity IFA to the largest of Wealth Management companies. This allows us to represent our members from a truly collective viewpoint to provide overarching lobbying, guidance and support when interfacing with government and the regulators.

Q4 2017 will see the launch of PIMFA’s learning programme with the first of our webinars which will focus on the Senior Managers Certification Regime (SMCR). The schedule will then be closely aligned to policy output and high level industry issues as it moves forward, with the General Data Protection Regulation (GDPR) and the Markets in Financial Instruments Directive II (MIFID II) high on the agenda.

To reflect the merger with APFA Q1 2018 will see the introduction of our regional expansion programme which will see conferences across the UK, Ireland, and the Crown Dependencies covering regulation, education, indices, enterprise investment schemes and much more.

Personal Investment Management Finance Advice Association

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Private Investor Index Series Timeline Name change from FTSE APCIMS to FTSE WMA Private Investor index series

Commercial property and alternatives asset classes were added

1997

2007

FTSE APCIMS Private Investor Indices launched – Comprising of 3 model portfolios (Balanced, Growth, Income) utilising 3 asset classes (equities, bonds and cash) – a committee was assembled to garner information from the membership on asset allocation policy to ensure that weightings remained relevant and reflective of member firms.

2011

2013

Conservative and Global Growth portfolio’s added to suite

From their inception in 1997 the Private Investor Index Series have been a widely used and respected index series. Used by both private clients and investment managers alike to measure the performance of portfolio and give a perspective on the wealth management and investment landscape. Over the years, this series has changed and adapted to the needs of our members and their clients. Now with 5 portfolios and 8 underlying asset indices the series represents an even broader and more detailed range of the investment universe.

With the switch from FTSE to MSCI as index provider on 1st March 2017 both the committee and working group thought it pertinent to ask member firms what they wanted from the index series and how to maintain its relevance in an ever changing investment landscape. The results of several member wide surveys indicated a desire to revisit the alternatives asset index and scope for a risk based index series with additional output. The indices working group are investigating these outcomes and further details will be available over the coming months.

2017

future

Change in data provider from FTSE to MSCI, expansion and enhancement of fixed income assets, to include corporate bonds & inflation linked bonds, and to the alternatives asset class.

This index series would not exist if it were not for the regular and consistent asset allocations surveys provided to us by member firms. I would like to thank all those firms that contribute to the quarterly asset allocation methodology survey. We would also like to thank those individuals and firms that attend the committee and working groups whose contributions are invaluable in maintaining the index series. Last and certainly not least I would like to thank those firms that have taken the time and effort to participate in the feedback process over the course of this year to help us with the next stage of the development of the Private Investor Index Series.

Moving into the 2017/18 membership year PIMFA will work with all relevant stakeholders and industry groups to further enhance the indices offering. This will ensure it remains relevant and useful to our member firms and their clients.

If you have any questions or queries regarding the index series please contact indices@pimfa.co.uk or call 020 7011 9866.

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Publications WMA Journal WMA’s glossy magazine contains a plethora of articles on the latest trends, hot topics and current issues for the wealth management industry alongside some indications for the future.

Useful Guides Written exclusively for WMA members our useful guides provide valuable insight and analysis on a range of important hot topics.

Several also contain practical assistance on implementing legislation.

Update WMA Update is a regularly published, concise round-up of our current activities.

This newsletter also highlights the key points from our committees and commentary and assistance on industry developments. For WMA members only.

WMA Bulletin An electronic newsletter sent out fortnightly delivering the latest news and current affairs from within the wealth management industry and WMA in small digestible updates.

Infographics Easy to read, visual representations of information or data on the latest industry issues.

Annual Report A review of the year, explaining who WMA are and what we do, as well as highlighting some of our key achievements from 1st June to 31st May.

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WMA Committees, Working Groups & Forums Business Leadership Committee

This is a forum consisting of CEOs and Heads of Wealth from member firms to discuss relevant topics, share concerns and share best practice with fellow senior WMA members. It also: • Provides fact-based evidence and information for the WMA to action in relation to their lobbying activities with the regulators and Government • Provides direction to the WMA for further activity required, eg meetings required with regulators and government, research, sub-groups on specific topics, consider opportunities to combine resources

Corporate Bonds Committee

The issuance of listed corporate bonds is governed by the Prospectus Directive. For many years successive versions of the Directive have adopted an increasingly restrictive approach to access to such bonds by retail investors. When the financial crisis began to bite in 2007, and in particular following the Lehman’s bankruptcy of October 2008, the decline and volatility in the equity markets highlighted the need for retail bond investments and the degree of regulatory failure entailed in preventing this. The Corporate Bonds Committee was formed at the time to assess how the UK retail market could be developed and to set WMA policy on pressing for appropriate legislative and regulatory changes, including to the Prospectus Directive, to enable this to happen.

European & International Board Sub Committee

Until the Brexit referendum the level of EU regulatory business grew in scale and direct importance to WMA members over many years, so it was essential to have a Committee focusing on this area and assessing where the WMA should target resources most effectively to influence European processes in favour of our members. This Committee has met regularly to consider specific European policies, proposals and other developments as necessary, drawing fully on the expertise of staff members from individual firms in the process.

Financial Crime Committee

The Financial Crime Committee aims to discuss all financial crime matters of significance such as anti-money laundering measures, serious organized crime, terrorist financing, fraud, identity theft, and boiler rooms with a view to ensuring member firms are kept fully informed of relevant legislative and regulatory developments, and can pick up on the latest approaches to combat financial crime.

Operations Committee

This Committee meets ten times a year and discusses settlement and other operational issues affecting WMA member firms. As well as responding to consultation papers relevant to operational issues, the Committee also flags practical issues firms have experienced and potential solutions available.

Private Investor Indices Committee

This Committee is responsible for ensuring the current asset allocations of the Private Investor Indices are reflective of WMA member firms. Examining compiled asset allocation information on a quarterly basis and making changes if necessary, it also discusses appropriateness of current underlying indices, new potential asset classes and examines reports from the working group.

Regulatory Board Sub Committee

The purpose of the Regulatory Committee is to advise WMA on all regulatory matters of significance to its membership through reviewing proposals from regulatory bodies, government initiatives relating to regulatory environment and any other regulatory issues that could impact upon the WMA community. This Committee is held on a monthly basis.

Retail Markets Committee

This Committee seeks to represent the interests and views of those WMA member firms who provide a service to individual “retail” investors. This covers specific trading and trade execution issues as well as an interest in wider UK and European proposals as they impact on the retail investor. The Committee meets 6 times a year.

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Working Groups & Forums Automatic Exchange of Information (AEOI)

The Working Group was established in 2010 in response to the implementation of the US Foreign Account Tax Compliance Act (FATCA) in the UK. Most recently the Working Group that meets on an adhoc basis has overseen WMA’s work in respect of the OECD’s global exchange of information requirements, the Common Reporting Standard.

Private Investor Indices Working Group

The “Indices Working Group” has been set up to examine the relevance and appropriateness of the Private Investor Index Series to the WMA community. Area’s under focus include objective v risk based indices, number of model portfolios, asset classes and underlying indices that are used. The group meets on a regular basis and reports its findings to the Private Investor Indices Committee.

HR Forum

HR is a vital part of the wealth management business.

It informs and drives key business aspects such as culture, behaviours, competence, recruitment, retention, engagement, development and remuneration, to name a few. Conduct risk, senior managers regime, TCF, T&C: major regulatory policy initiatives, which impact all or parts of the wealth management sector, which directly involve HR. The HR forum is a strategic forum and invitees are Heads of/ Directors of HR. Extra breakfast or lunchtime seminars may be arranged to include wider HR staff.

The objectives include to identify and discuss issues where collective action may be beneficial and potentially provide economies of scale; feed ideas into the WMA of projects, which take forward such collective action; gather views and information on company data/information for benchmarking purposes; identify and share good practice; identify, discuss and exchange views and intelligence on policy issues to feed into the overall policy work of the WMA.

40

Taxation Simplification Working Group

Effectively taking over from the existing Taxation Committee, this Working Group has identified areas of tax and tax reporting where simplification would benefit both investment firms and their clients at very little or no cost of the Exchequer.

Trading Forum

The Trading Forum discusses specific trading issues that affect WMA member firms and the wider market. Whilst most of its focus is on the Retail Service Provider model, the Forum also looks at exchange and multilateral trading facility-related issues as they impact on the retail market. The Forum includes Heads of Trading from both stockbroking and investment management firms and meets 4 times a year.

MiFID II Working parties

During 2016 and 2017, WMA set up a number of working parties, mainly in the areas of: • • • • • • • •

Cost and Charges Product Governance Product Governance Manufacturers Telephone Taping Reporting to Clients Research Suitability Transaction Reporting

As an open forum for member firms, the MiFID II working parties are technical meetings whose output goes to regulators and relevant authorities. The group’s help firms discuss their main concerns with regards to MiFID II implementation and are a useful instrument in the production of our MiFID II bible.

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Firms on WMA Committees, Working Groups & Forums The following WMA member firms provide vital contribution to our committees, forums and working parties:

Member firms on WMA committees AJ Bell Arbuthnot Lantham Barclays Barratt & Cooke Bellecapital BITA Risk Bovill Brewin Dolphin BRI Wealth Management Plc Brooks MacDonald Canaccord Genuity Wealth Management Cave & Sons Cazenove Charles Russell Speechlys LLP Charles Stanley City Asset Management Close Brothers Clyde & Co Cofunds Ltd Coutts Davy Duncan Lawrie Edwards Securities Ltd Equiniti Financial Services Euroclear Halifax Share Dealing Ltd Hargreave Hale Ltd Hawksmoor IM Heartswood Herbert Smith Freehills HSBC

IG Group Interactive Investor Investec Wealth & Investment J M Finn & Co James Brearley & Sons James Hambro JM Finn Killik & Co LGT Vestra Lloyds Bank London Stock Exchange Morningstar Investment Management Multrees Investor Services Ltd Murray Asset Management Odey Wealth Peel Hunt Pershing Ltd Platform Securities Quilter Cheviot Ramsey Crookall & Co Ltd Rathbones Raymond James Redmayne Bentley Rossie House Investment Management Rothschild Ruffer Sanlam Private Investments Santander The Share Centre Shore Capital Stockbrokers Ltd

Smith & Williamson Speirs and Jeffrey Standard Life TD Direct Investing Thesis Asset Management Vanguard W H Ireland Walker Cripps Stockbrokers Waverton WH Ireland Limited

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Individuals on WMA Committees, Working Groups & Forums Our members in-put at committees, forums and working parties is invaluable and WMA would like to take the opportunity to thank all its committee members:

Individuals on WMA committees Adam Griffin Adrian Keane-Munday Alan Mathewson Alex Dobson Alison Dixon Alison Moynihan Alistair Thaw Allan Fielder Andrew Banks Andrew Butcher Andrew Cockerhill Andrew Meiklejohn Andy Baldock Andy Bysouth Andy McGlone Andy Steele Angela Teodorescu Angela Webber Annika Henke Brian Gray Brian McLean Carmel McLean Carol Smith Caroline Foster Charles Beck Charles Cox Charles Ramsay Charlotte Black Cheryl Bennett Chris McDonald Chris Babington Chris Holme Christine Rose-McCoy Christopher Green Clive Cunningham Damien Syrett Dan Boardman Weston Darren Carr Darren Ruane

42

Daryl Roxburgh Dave Meldrum David Baker David Esfandi David Forrest David Fuller David Hood David Louden David Peach David Richards David Scott Dayleen van Zyl Dean Wragg Dena Brumpton Derek Edgar Dominic Fielding Douglas Tennant Duncan Gwyther Duncan Taylor Ed Bettison Edward Heaton Edward Hodson Emma Spratley Evangelia Georgopoulou Fabian Richter Felicia Nwokedi Francois Kotze Gary Tibbs Gavin Oldham Gavin Thompson Gill Austin Glen Cooper Graham Neale Harriet Deeble-Rogers Heather Yeadon Helen Watson Henryk Dubeck Hugo Watson Brown

Iain Green Iain Wallace Ian Clogg Ian Perrett Ian Welch Jackie Johnston James Hornett Janet Rumney Jean Hill Jennifer Sproson Jim Appleby Jim Wood-Smith Joanna Crookall Joanne Braine Joel Ripley John Amor John Dodds John Gumpel John Simon Joshua Funson Judith Ulock Judy Price Julian Connelly Julie Steele Karen Anderson Kevin Macdonald Kim Van Tonder Lauren Paterson Len Clark Linda Riddall Lisa Hamer Louise Stanway Lucy Jackson Mac Anderson Manda McConnell Margaret Brett Maria Adam Mark Bulsing Mark de Ste Croix

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Individuals on WMA committees continued Mark Decker Mark Glowrey Mark Holmes Mark Spiers Mark St Coix Martin Andrews Martin Mannion Martin McGinley Martin Nelson Martin Verlaine Martin Williams Meghan Faherty Melanie Kearney Michael Collins Michael Morley Michael Parry Mick Gilligan Mike Callicott Mike Collison Mike Rigby Mike Smith Miles Piercy Myles Marmion Myles Sindlehurst Natalie Payne Neil Deacon Neil Greenwood Nick Scarrett Nick Stebbing Nicola Peters Nigel Corrie Nigel Daisy Noelle Cazalis Nusrat Ghani Oliver Stones Pamela Hornal Patricia Campion Patricia Donnelly Patrick Gordon Paul Barnacle Paul Chapman Paul Chavasse

Paul Cusack Paul Killik Paul Martin Paul Murphy Penny Kunzig Penny Rooney Peter Hall Peter Kyriacou Peter Norman Peter Smart Peter Westaway Phil Nathan Phil Patient Philipp Mitterbauer Rachel John-Charles Rebecca Fifield Rebecca Griffith Remy Carpenter Richard Boast Richard Carter Richard Charnock Richard Fuller Richard Larner Richard Lock Richard Neville-Rolfe Richard O’Neill Richard Smith Richard Warrington Robert Howard Ruthven Gemmell Sanna Jordansson Sara Boswell Sarah Deaves Sharon Marti Sheila Nicoll Simon Partington Stephen Simper Stuart Baker Stuart Cummins Susanne Harwood Suzanne White Svetlana Rhodes

Tamson Martin Thomasina McGuigan Tim Archer Tim West Tina Manzi Tom O’Leary Valentina King Victoria Powell Vincent Mercer Will Walker - Arnott Yen Chang Zornitsa Daskalova

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ACCOUNTS

44

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Report and Accounts 31 May 2017 The directors present their report and the audited financial statements for the year ended 31 May 2017.

Principal activities

The company’s principal activity during the year continued to be to look after the interests of and represent the views and concerns of private client investment managers, private banks and private client stockbrokers all over the UK, Ireland, the Channel Islands and Isle of Man, and it expects to do so in the foreseeable future. See also Post balance sheet note on below showing expansion of membership firms.

Business review

Directors

The net asset position at 31 May 2017 was £1,340,075 The following persons served as directors during the year: Tim Ingram Chairman - resigned 19 September 2017 (2016: £1,374,532).

Liz Field - Chief Executive There was a surplus before taxation and exceptional Andrew Ross - Deputy Chairman costs of £26,923 (2016: loss £ 25,150).

David Cobb Exceptional costs of £61,380 (2016: £nil) were incurred Rupert Dickinson in preparation for the merger with The Association of Ruthven Gemmell Professional Financial Advisers (APFA), further details of Sir David Howard Bt which are set out in the post-balance-sheet event below.

Paul Killik There was a deficit after taxation and exceptional costs of David Loudon £34,457 (2016: £25,150 deficit) James McCulloch Revenue was up by 4% (12%) due to an increase in Michael Morley Andy Pomfret workshops and seminars. The cost of services to members Sarah Soar (direct costs) was increased by 19% due to the wider Jonathan Wragg programme of events undertaken in the year.

Charlotte Black (resigned 20 September 2016) Administration costs were reduced by 3% due to Adam Seale (resigned 31 May 2017) rationalisation of office overheads. The details of the results Gary Bottriell (appointed 1 June 2017) for the year are set out on page 47.

The Rt. Hon. Lord Deben - appointed 1 June 2017 The company has taken advantage of the special exemption Chair from 19 September 2017 for small companies under the Companies Act 2006, and Martin Greenwood (appointed 1 June 2017) therefore has not produced an enhanced business review.

Julie Hepworth (appointed 1 June 2017)

Directors indemnities

•

Going Concern

Auditor

The company has qualifying third party indemnity provisions for the benefit of its directors, which were made during the year and remain in force at the date of this report.

As stated in Note 1 to the accounts, the directors have concluded that the use of the going concern basis of accounting is still relevant despite recent losses. The cash reserves remain high enough to sustain trading in the immediate future.

Post balance sheet event

On 1 June 2017, the Wealth Management Association (WMA) merged with The Association of Professional Financial Advisers (APFA) and changed its name to Personal Investment Management and Financial Advice Association (PIMFA).

The Company’s principal activities were expanded to cover member firms in Financial Planning and Advice within the UK.

Disclosure of information to auditors

Each person who was a director at the time this report was approved confirmed that: • So far as he/she is aware, there is no relevant audit information of which the company’s auditor is unaware

He/ she has taken all the steps that he/ she ought to have taken as a director in order to make himself/ herself aware of any relevant audit information and to establish that the company’s auditor is aware of that information.

Sayer Vincent LLP was appointed as the company’s auditor during the year and has expressed its willingness to continue in that capacity.

Small company provisions

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 applicable to companies subject to the small companies’ regime, and the company has taken the exemption from preparing a Strategic Report.

This report was approved by the board on 7 November 2017 and signed by its order: The Rt. Hon Lord Deben Director

James McCulloch Director

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Opinion on the financial statements

Statement of Directors’ Responsibilities The directors are responsible for preparing the report and accounts in accordance with applicable law and regulations.

Company law requires the directors to prepare accounts for each financial year. Under that law the directors have elected to prepare the accounts in accordance with United Kingdom Generally Accepted Accounting Practice (UK Accounting Standards and applicable law).

Under company law the directors must not approve the accounts unless they are satisfied that they give a true and fairview of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing these accounts, the directors are required to: • Select suitable accounting policies and then apply them consistently : • Make judgements and estimates that are reasonable and prudent: • State whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements • Prepare the accounts on the going concern basis unless it is inappropriate to presume that the company will continue in business The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the accounts comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence taking reasonable steps for the prevention and detection of fraud and other irregularities.

46

We have audited the financial statements of the Personal Investment Management and Financial Advice Association (the ‘company’) for the year ended 31 May 2017 which comprise the statement of comprehensive income, balance sheet and the notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements: • Give a true and fair view of the state of the company’s affairs as at 31 May 2017 and of its result for the year then ended • Have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice • Have been prepared in accordance with the requirements of the Companies Act 2006

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.

We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • The directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • The directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue

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Other information

The other information comprises the information included in the directors’ annual report, other than the financial statements and our auditor’s report thereon.

The directors are responsible for the other information.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit: • The information given in the directors’ annual report for the financial year for which the financial statements are prepared is consistent with the financial statements • The directors’ annual report has been prepared in accordance with applicable legal requirements

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, set out in the directors’ annual report, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

This report is made solely to the company’s members as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Matters on which we are required to report by exception

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • Adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or • The financial statements are not in agreement with the accounting records and returns; or • Certain disclosures of directors’ remuneration specified by law are not made; or • We have not received all the information and explanations we require for our audit; or • The directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies’ exemptions in preparing the directors’ annual report and from the requirement to prepare a strategic report

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors’ annual report.

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• •

purpose of expressing an opinion on the effectiveness of the entity’s internal control Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the entity to cease to continue as a going concern

•

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Joanna Pittman (Senior statutory auditor) 7th November 2017 for and on behalf of Sayer Vincent LLP, Statutory Auditor Invicta House, 108-114 Golden Lane, London, EC1Y 0TL

Statement of comprehensive income For the year ended 31 May 2017 Notes

2017 £

2016 £

Turnover

2

2,217,694

2,126,692

Cost of services to members

3

(232,919)

(195,714)

1,984,775

1,930,978

(1,967,115)

(2,037,130)

17,660

(106,152)

9,263

2,659 68,264 10,079

26,923

(25,150)

Gross profit Administrative expenses

4

Operating profit/(loss) on ordinary 5 activities before interest and taxation Income from investment Gain on realisation of investment Interest receivable Profit/(loss) on ordinary activities before taxation Exceptional costs

6

Loss on ordinary activities before taxation

(61,380) (34,457)

(25,150)

-

-

Loss for the financial year

(34,457)

(25,150)

Accumulated profit at 1 June 2016

1,374,532

1,399,682

1,340,075

1,374,532

Tax on loss on ordinary activities

Accumulated profit at 31 May 2017

8

12

All of the above results are derived from continuing activities (and includes all comprehensive income). There were no other recognised gains or losses other than those stated above. All movements in equity are included within the statement above.

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Balance Sheet as at May 2017 2017

2018

ÂŁ

ÂŁ

10,059

12,613

10,059

12,613

225,566

205,192

455,422

450,000

1,157,074

1,017,628

1,838,062

1,672,820

508,046

310,901

Net current assets

1,330,016

1,361,919

Net assets

1,340,075

1,374,532

1,340,075

1,374,532

1,340,075

1,374,532

Notes

Fixed assets Tangible fixed assets

9

Current assets Debtors

10

Short term deposits Cash at bank and in hand

Creditors: Amounts falling due within one year

Capital and reserves Profit and loss account

11

12

The accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies regime of the Companies Act 2006.

The financial statements were approved by the Board of Directors on 7 November 2017 and signed on behalf of the Board of Directors:

The Rt. Hon Lord Deben Director Director

James McCulloch Director

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Notes to the financial statement ended 31 May 2017 For year end 31st may 2017

1. Accounting policies Statutory information

Personal Investment Management and Financial Advice Association is a company limited by guarantee and is incorporated in the United Kingdom. The registered office address and principal place of business is 22 City Road, London, ECl Y 2AJ.

Basis of preparation

The financial statements have been prepared under the historical cost convention and in accordance with applicable UK Accounting Standards, including the Financial Reporting Standard 102 section 1A for Smaller Entities (effective January 201 5), and with the Companies Act 2006.

Depreciation

Assets are capitalised when the purchase price exceeds ÂŁ500 and the useful life exceeds one year.

Depreciation has been provided at the appropriate rates in order to write off the assets over their estimated useful lives.

All classes of assets are depreciated over a period of four years using the straight line method.

Taxation

Current tax, including UK corporation tax, is provided at amounts expected to be paid (or recovered) using the tax rates and laws that have been enacted by the balance sheet date. No corporation tax was due for 2016 or 2017 as pre-tax losses appertained. As Personal Investment Management and Financial Advice Association is a small company, the small company rate of 20% would apply if pre-tax profits were present.

Foreign currencies

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. All differences are taken to the profit and loss account.

Pensions

The company operates a defined contribution pension scheme.

Contributions are charged to the profit and loss account as they become payable in accordance with the rules of the scheme.

In preparing the accounts, the trustees have considered whether in applying the accounting policies required by FRS 102 Section 1A a restatement of comparative items was required. The date of transition was 1 June 2015. No adjustments were identified.

Operating leases Rental charges are charged on a straight line basis over the term of the lease.

Turnover

Cash at bank and in hand

Debtors

Trade and other debtors are recognised at the settlement amount due after any trade discount offered. Prepayments are Going concern The directors have a reasonable expectation that the valued at the amount prepaid net of any trade discounts due.

Company has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to Creditors adopt the going concern basis of accounting in preparing the Short term trade creditors are measured at the transaction price. annual financial statements.

Turnover represents the value, net of value added tax and Cash at bank and cash in hand includes cash and short term discounts, of fees rendered and work carried out in respect of highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or services provided to members and customers. similar account.

Income is recognised when services have been delivered to members and customers such that risks and rewards of Short term deposits Short term deposits include cash balances that are invested in ownership have transferred to them. accounts with a maturity date of between 3 and 12 months.

Interest receivable

Interest on funds held on deposit is included when receivable and the amount can be measured reliably; this is normally upon notification of the interest paid or payable by the bank.

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2. Turnover

2017

2016

£

£

1,870,568

1,899,638

Workshops and seminars

162,805

115,473

Conference fees

171,821

111,581

Indices income

12,500

-

2,217,694

2,126,692

Membership fees

3. Services to members

WMA journal Workshops and other events

4. Administrative expenses Staff costs

2017

2016

£

£

4,186

4,450

228,733

191,264

232,919

195,714

2017

2016

£

£

1,336,453

1,305,259

Professional fees

194,853

152,406

Property costs

229,594

240,857

General expenses

157,984

283,826

Printing, postage, stationery

12,526

20,875

Depreciation

5,905

5,558

Travel

26,257

25,944

Committee meetings

3,543

2,405

1,967,115

2,037,130

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5. Operating profit / (loss) This is stated after charging: Depreciation of owned fixed assets Directors’ remuneration (Chair and CEO)

2017

2016

£

£

5,905

5,558

253,230

250,000

7,500

5,500

600

-

-

2,874

132,333

131,333

1,920

1,570

Auditors’ remuneration (excluding VAT): Audit Other services Redundancy costs Operating lease rentals: Property Equipment

The company made pension contributions of £6,010 (2016: £6,000) in respect of one director.

6. Exceptional costs Exceptional costs incurred in preparation for the merger with APFA which was effective from 1 June 2017. These included legal and professional fees plus initial rebranding costs.

7. Staff costs Staff costs (including directors) during the year were as follows:

2017

2016

£

£

Wages and salaries

1,150,473

1,132,707

Social security costs

124,655

136,603

Pension costs

40,302

20,265

-

2,874

21,023

12,810

1,336,453

1,305,259

Redundancy costs Other staff costs

CEO and Staff numbers The average number of persons employed by the company (including executive directors) during the year, analysed by category was as follows:

52

2017

2016

Number

Number

1

1

17

18

18

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8. Taxation 2017

2016

£

£

UK corporation tax at 20% (2016: 20%)

-

-

Deferred tax

-

-

Tax on results on ordinary activities

-

-

At the year end the company had £520,352 (2016: £491,800) corporation tax losses and £13,000 (2016: £13,000) other tax losses carried forward on which no deferred tax asset has been recognised since the company does not have forecast profits. The value of the unrecognised deferred tax asset at the enacted rate of 20% was £106,670 (2016: £100,960).

9. Tangible fixed assets

Cost At the start of the year Additions in year

Computer equipment

Furniture

Office equipment

Total

£

£

£

£ 143,622

54,839

76,379

12,404

2,968

-

383

3,351

-

-

-

-

57,807

76,379

12,787

48,475 3,343 -

71,457 1,947 -

11,077 615 -

131,009 5,905 -

At the end of the year

51,818

73,404

11,692

136,914

Net book value At the end of the year

5,989

2,975

1,095

10,059

At the start of the year

6,364

4,922

1,327

12,613

At the end of the year Depreciation At the start of the year Charge for the year

146,973

10. Debtors 2017

2016

£

£

Trade debtors

48,761

112,519

Prepayments

162,824

84,800

Other debtors

13,981

7,873

225,566

205,192

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11. Creditors: amounts falling due within one year 2017

2016

£

£

Trade creditors

135,728

54,572

Taxation and social security

41,535

89,805

Other creditors and accruals

330,783

166,524

508,046

310,901

2017

2016

£

£

1,374,532

1,399,682

Loss for the year

(34,457)

25,150)

At 31 May 2017

1,340,075

1,374,532

12. Profit and loss account

At 1 June 2016

13. Other financial commitments At the year end the company had total commitments under non-cancellable operating leases: Property

Less than one year One to five years Over five years

Equipment

2017

2016

2017

2016

£

£

£

£

132,500

132,333

1,920

1,920

22,083

154,583

640

2,560

-

-

-

-

154,583

286,916

2,560

4,480

14. Members’ capital The company was incorporated on 17 November 1994 as a company limited by guarantee. The members of the company have each agreed to contribute a sum not exceeding £10 in the event of the company being wound up. At 31 May 2017 the company had 179 (2016: 182) members.

Members are not entitled to participate in a surplus in the event of winding up of the company, any surplus remaining will be transferred to institutions having objects similar to the objects of the company.

The members are the ultimate controlling party.

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15. Related party transactions The company holds bank deposit accounts with Investec, Barclays and Lloyds Banking Group, who are member organisations and have board representation. The bank accounts are held in the normal course of business.

Balance 2017

Balance 2016

Interest earned 2017

Interest earned 2016

£

£

£

£

Investec

217,066

764,250

1,337

2,298

Barclays

539,267

253,343

2,367

7,331

Lloyds Banking Group

400,000

-

159

-

There were no other related party transactions requiring disclosure.

16. Post balance sheet event On 1 June 2017, the Wealth Management Association (WMA) merged with The Association of Professional Financial Advisors (APFA) and changed its name to Personal Investment Management and Financial Advice Association (PIMFA). The Company’s principal activities were expanded to cover member firms in Financial Planning and Advice within the UK.

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Report designed by Cicero No responsibility for loss to any person acting or refraining from acting as a result of any material contained in this publication can be accepted by the WMA, the author, publisher or printer. The views expressed by individual contributors are not necessarily those of the Association.

Company limited by guarantee. Registered in England and Wales.

No 2991400. VAT registration 675 1363 26. Copyright WMA 2016.

22 City Road Finsbury Square London EC1Y 2AJ Tel: +44 (0)20 7448 7100 Fax: +44 (0)20 7638 4636 www.thewma.co.uk Twitter: @wma_uk Members: enquiries@thewma.co.uk Non-members: info@thewma.co.uk

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