PIMFA Fortnightly News Bulletin - 31st October 2019 by PIMFA

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PIMFA Fortnightly News Bulletin - 31st October 2019 Welcome to the PIMFA Bulletin, our fortnightly e-newsletter delivering a snapshot of the latest news and current affairs from within PIMFA and the industry.

What is PIMFA working on? New PIMFA Member Firm We are very pleased to welcome a new member (and PIMFA Plus partner) to the association.:

Investor Meet Company â&#x20AC;&#x201C; Retail Investor Platform

We look forward to working with you.

BREXIT UPDATE Brexit extension and December election The UK will not leave the EU on Thursday, 31st October. Following a weekend of consultations, European Council President Donald Tusk confirmed on Tuesday, 29th October that the EU27 leaders have agreed to a fourth Brexit delay until 31st January 2020. The decision was taken unanimously by EU leaders by written procedure after France dropped its argument for a short delay.

According to the statement issued by the European Council, the extension will last until 31st January 2020 to allow more time for the ratification of the Withdrawal Agreement. The withdrawal can take place earlier, on 1st December 2019 or 1st January 2020, if the Withdrawal Agreement is ratified by both parties. For the duration of the extension the United Kingdom remains a member state with all the rights and obligations set out in the treaties and under EU law. Donald Tusk, whose role as the Council President is coming to an end, said the three-month Brexit extension "may be the last one" and urged the UK politicians to “use it wisely”.

While Parliament backed the Withdrawal Agreement Boris Johnson agreed with Brussels, it was unable to pass the three day legislative timetable. MPs demanded more time for the debate and forced the Prime Minister to request another delay from the EU.

As we now know, the UK will hold a general election on 12th December. The Prime Minister’s plan for a pre-Christmas election was backed in Parliament by 438 to 20 votes with almost 200 MPs abstaining. The Bill is now moving to the House of Lords where it is expected to pass through quickly to allow Parliament to be dissolved on 6th November. This will be the first winter general election since 1923, second since the UK voted to leave the EU and third in less than five years. It is expected that the election will be run with Brexit as a defining issue. The Conservative Party hopes for a majority in Parliament and a fresh mandate which will break the Brexit deadlock. The Labour Party advocates a softer deal with the EU and putting it to the public in a referendum while the Liberal Democrats promise to revoke Article 50. Regardless of the result of the upcoming election, the Government confirmed that the country will stay in the EU at least until the end of the year. The Conservatives currently enjoy a double digit lead in the polls but Johnson’s predecessor Theresa May enjoyed an even bigger lead in the 2017 election. If the result of the upcoming election is a hung parliament, as some predict, the Brexit paralysis could continue.

The solution to the Brexit deadlock depends entirely on the result of the election on 12th December with four possible outcomes: UK leaves the EU on the existing deal, UK renegotiates the existing deal, the UK holds another EU referendum or the UK cancels Brexit. However, it is important to remember that the default position is also still on the

table. If the deal Boris Johnson agreed with the EU is not passed by Parliament, the UK will leave the EU without one on 31st January 2020. We have advised before that the absence of a deal means that the transition period does not apply and the UK becomes a ‘third country’ on the date it leaves the EU. In such a scenario, the change of business practices for our firms will be immediate. As passporting will cease to exist, we remind our firms that if they wish to access clients in the EU Member States, they need to consider the following options: 

Setting up an entity in each Member State where there are clients

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Setting up a passporting subsidiary in one EU Member State for all EU clients

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Merging or affiliating with an existing EU based firm

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Seeking an alternative provider to the EU clients and withdrawing from the EU private client market

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Only using mitigating factors such as a reverse solicitation in situations where they have checked that that it will work

FCA Brexit latest The EU and the UK have agreed to extend the date for the UK’s departure from the EU. As a result, firms do not need to take action to implement Brexit contingency plans for 31 October.

The FCA will be extending the date by which firms and funds should notify it for entry into the temporary permissions regime (TPR) to 30 January 2020. Fund managers will have until 15 January 2020 to inform the FCA if they want to make changes to their existing notification.

Firms should continue to comply with existing regulatory requirements, including those relating to MiFID transaction reporting and EMIR trade reporting requirements. The arrangements described in their press release of 11 October are suspended and they expect firms to continue to report as normal.

The FCA will continue to provide updates on their website and through other channels. Firms can also call the FCA Brexit information line (0800 048 4255) if they are unsure what changes they need to make as a result of the extension or have any further questions.

PIMFA attends the FCA’s Trade Association Group on cyber security Attendees were asked to present on the top 3 challenges their sectors were facing. Several challenges were found to be common to different sectors of the financial services landscape. Notable ones are third party risk, insider threat and social engineering.

The National Cyber Security Centre (NCSC) gave the following update: 

The NCSC recommends firms to contact them if they are experiencing a cyber incident. The NCSC can provide advice or even intervene if the attack has a large impact and/or if it comes from a nation state.

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NCSC’s numbers show that the top threat comes from Office 365 – this can be exploited by criminals by way of methods such as credentials stuffing or phishing to commit offences such as IP theft or espionage.

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NCSC is looking to release a vulnerability scanning tool called “webcheck” – this is now in pilot so we hope it will be available soon!

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NCSC’s updated phishing guidance is available here.

PIMFA responds to the FCA’s Pension Transfer Advice on Contingent Charging In our response, we make clear our position that it is difficult to prove a link between contingent charging and unsuitable advice and that the FCA has to “raise the evidential bar” in order to justify the proposed change. To read the response in full, please click here. To read PIMFA’s press release, please click here.

The Stewardship Code The Financial Reporting Council has issued a revised UK Stewardship Code for 2020, available here. Some of the key changes include:

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an extended focus on asset owners, including pension funds and insurance companies as well as service providers and asset managers

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a requirement for an annual report on stewardship activity and the outcomes of the activity

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the expectation for environmental, social and governance (ESG) factors, which include climate change, to be taken into account

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signatories to the Code will have to explain exercise of stewardship across asset classes and in investments outside the UK.

The new Code takes effect from 1 January 2020. The FRC also published a feedback statement, available here.

SM&CR PIMFA recently enquired of the FCA if people performing certification roles during the transitional year require a certificate when they are hired.

It has now been clarified that people performing certification roles who join during the year should be identified as Certification Staff (and trained in the Conduct Rules), but they don’t need to be certified as Fit & Proper or have a certificate issued on recruitment (SYSC TP7). Specifically, 7.2.4G of that chapter contains a table setting out how the Certification Regime applies during the transition period - row 2 of the table confirms that SYSC 27.2 (issuing certificates and fitness) does not apply during the transition period.

White-listing the PIMFA domains to ensure all our emails reach you Please ask your IT teams to white-list our domains - pimfa.co.uk and pimfa.uk – this will ensure that PIMFA communications are not blocked and that you don’t miss out on your free member benefits such as webinars, podcasts, Update, newsletters, CEO updates, technical useful guides, event invitations and more. If you have any questions, please email us at enquiries@pimfa.co.uk and we will be happy to help.

Latest PIMFA Press Releases

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PIMFA Calls for the Regulator to Raise The Bar

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Sustainability, Diversity and Wellbeing Highlighted As Key Topics at PIMFA Summit

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PIMFA Announces Strategic Partnership with Investor Meet Company

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PIMFA Annual Summit Addresses Key Areas for Evolution and Innovation in Financial Services

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PIMFA Women in Wealth Forum Encourages Culture Changes to Help Improve Gender Equality in Finance

Read all of PIMFA's Press Releases

Latest PIMFA Consultation Responses 

PIMFA response to Pension transfer advice: contingent charging and other proposed changes

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PIMFA’s response to Guidance Consultation 19/3: Guidance for firms on the fair treatment of vulnerable customers

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PIMFA’s response to FOS Our future funding - A consultation

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FCA CP19/20 - Our Framework – Assessing Adequate Financial Resources

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BSI draft technical advice (PAS 7340) - Framework for embedding sustainable finance principles in financial services organisations

Read all of PIMFA's Consultation Papers

What's coming up in PIMFA? PIMFA LEARNING PIMFA's Autumn Webinars

We are currently running a series of FREE webinars. The next, supporting members in Re-evaluating Suitability & Compliance Approaches for High-Risk Customers, is scheduled for Tuesday, November 5th, followed by; SM&CR: The Hidden Challenges for HR, 7th November SM&CR: Training and Competence, what you really should know, 27th November

For a full list of upcoming webinars, please click here. *If you are registering for a PIMFA account for the first time, please allow 48 hours to authenticate your details, process bookings and receive your webinar link*

PIMFA's Training Courses In addition, we have engaged some of the leading experts in the field to design and deliver a number of training workshops for PIMFA member firms including; Let’s talk about Product Governance and PROD Rulebook Date: Tuesday 19th Nov Cost: £400 (members)/£500 (non-members)

With the FCA stating earlier this year that it will turn its attention on how firms are implementing new rules around product governance, advisors would be wise to review how they are complying with PROD (Product Intervention and Product Governance Sourcebook) which came into force rather under the radar with MiFID II in January 2018. At its heart, PROD requires that advisors and providers must demonstrate to the regulator that the cost, service and investment proposition they are recommending are appropriate for each client segment. It is important for both groups to avoid another unregulated collective investment scheme, life settlement fund, pension transfer or whatever problem is coming around the corner.

This practical one day workshop prepares you to meet your obligations under PROD, helping you make any changes to products and services that you offer, so that by the end of this workshop you will be able to grasp what the FCA expects you to know about Product Governance & The PROD rules.

For more details on PIMFA's webinars and training courses visit our website/click below or email learning@pimfa.co.uk.

*Please note that as of 1st June, PIMFA events & learning can only be booked using a credit card* Sign Up

PIMFA Associate Members Briefing & Drinks Reception Monday 25th November 2019, 17:30 – 19:30 Farrer & Co, London, 20-23 Lincoln’s Inn Fields – London WC2A 3ED On November 25th we will be hosting our last 2019 Associate Members Briefing. Exclusively designed for PIMFA Associate Members, this event is a forum for attendees to learn about the issues currently impacting on the UK Investment Management & Financial Advice industry.

It will explore topics such as regulation, operations, taxation and provide an opportunity to discuss with PIMFA staff specific issues important to the membership.

This event is free to members.

Financial Adviser Forum 22nd January, 2020 - 13:30 – 20:00 Farrer & Co – 20-23 Lincoln’s Inn Fields – London WC2A 3ED On Wednesday 22 January PIMFA will host the 2020 Annual Financial Adviser Forum. Our Forum begins at Farrer & Co with an afternoon of education and CPD, ending the day with a drinks reception at the House of Lords. Topics on the day will include: 

Retirement – How do Financial Planning Build a Client Friendly Proposition for the Future?

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Managing Risks in Challenging Economic Environments

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Client Communications – How to Drive Better Understanding

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The How to Guide to Acquisitions

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Later Life Advice – Preparing for Care, IHT, Intergenerational Wealth Transfer

The educational forum will be followed by a drinks reception at the House of Lords.

Financial Crime Conference February 4 2020 - 08:30 – 17:00 London, TBA Join us at the PIMFA Financial Crime Conference 2020 and access leading industry debate from professionals across the regulatory, law enforcement and cyber security space. As the financial crime landscape evolves with new techniques and technologies, the growing threat to firms and their clients is undeniable.

Hear from speakers such as Damon Batten, Managing Consultant Head of Markets at Bovill and Alison Barker, Director of Specialist Supervision at the FCA on topics including: • •

Money How

•

the

Laundering Industry

Utilizing

for Technology

Wealth to

Combat

Managers Financial

Regulatory

Crime? Update

What's happening in our industry Latest news from the Financial Conduct Authority SM&CR Toolkit

The FCA is extending the Senior Managers and Certification Regime (SM&CR) to FCA

solo-regulated firms on 9 December 2019. This extension affects almost every soloregulated firm, from very small firms to some of the largest global firms. It will help to set a new standard of personal conduct for everyone in the industry and is a chance to embrace change for the better. To help firms prepare for the regime change, they’ve created a toolkit of communications materials to share with firms and help in preparation.

Webpages: FCA's SM&CR webpages for solo-regulated firms are their central source of information. There is information on how the SM&CR applies to firms, categorisation, conversion from the Approved Persons Regime and answers to frequent queries. They also have checklists which set out what firms will need to do to prepare, depending on their SM&CR category. Guide: The SM&CR Guide for Solo-Regulated firms is a summary of the FCA’s final rules and guidance.

Short video: Together with business leaders from AXA PPP healthcare and Fidelity International, FCA Head of Conduct Specialists, David Blunt, outlines the effects of SM&CR and its benefits for firms. For the link, please click here. To download, please click here.

Podcasts: They also have three short Inside FCA podcasts, which provide a clear and concise overview of what firms need to do to prepare for SM&CR: 

SM&CR and culture – Jonathan Davidson

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Conduct rules – David Blunt

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Certification – David Blunt

Latest Industry Events

The 5th Annual Culture and Conduct Forum for the Financial Services Industry Thursday, November 14, 2019 Royal Garden Hotel, 2 -24 Kensington High Street, London W8 4PT United Kingdom

With an aim to improve public trust while also meeting the regulators’ expectations, financial services companies are re-designing their ‘purpose’ in order to encourage cultural change. However, questions remain including:

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How can strategies and incentives be aligned with the organisation’s new ‘purpose’? 

Does a clear definition of ‘purpose’ help to achieve a healthy culture?

At the 5th Annual Culture and Conduct Forum for the Financial Services Industry, we are delighted to welcome Andrew Wilson, Chief Executive Officer EMEA, Goldman Sachs Asset Management; Joe Garner, Chief Executive Officer, Nationwide Building Society; Tiina Lee, Chief Executive Officer, UK and Ireland, Deutsche Bank; and Sir Charles Bowman, Partner, PwC, who will explore the role of purpose in creating healthy cultures and discuss how their organisations have approached the challenges of communicating it to their stakeholders and regulators.

Keynote Speakers •

Jonathan Davidson, Director of Supervision – Retail and Authorisations and a Member of the Executive Committee, FCA

•

James Bergin, Deputy General Counsel and Senior Vice President of the Legal Group, Federal Reserve Bank of New York

Attendance at this highly topical event will be invaluable for the senior management of all FCA regulated firms, including banks, asset managers and insurers. It will also be of particular interest to heads of compliance, heads of operations, heads of legal, heads of internal audit, head of culture and HR and heads of training and education, as well as members of the advisory community, such as lawyers, consultants and accountants. Cost: £645 + VAT – £516 with a 20% PIMFA member discount: CC5PIMFA

www.cityandfinancialconferences.com/cultureconduct2019

MoneyWeek Wealth Summit Friday 22nd November 2019 etc.venues St Paul’s, 200 Aldersgate, London, EC1A 4HD The event will be hosted by MoneyWeek editor-in-chief, Merryn Somerset Webb, along with executive editor John Stepek and the editorial team, and focus on “The future of wealth: growth and protection". We'll be discussing everything from the impact of political turbulence on your portfolio, to the most exciting technology investment themes, to the future of our increasingly topsy-turvy monetary system. We’ll also be looking at both how to grow and how to protect your wealth against an increasingly complicated political and economic backdrop.

Confirmed speakers already include: •

James Anderson, co-manager of the extremely successful Scottish Mortgage Trust; •

British tycoon and longevity investor Jim Mellon; •

•

Financial historian and analyst Russell Napier;

Andy Haldane, the Bank of England's chief economist; Former pensions minister Sir Steve Webb; •

plus Dame Helena Morrissey.

https://moneyweekwealthsummit.co.uk/

View all the latest industry events on our website here If your firm has an event which you would like to post on this area, please click here to submit it.

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