WMA Bulletin 29th June 2016
What's going on in our industry? The Brexit Vote and Useful Guide Following the momentous vote last week for the UK to leave the European Union (EU), WMA will be monitoring developments very closely as the Government responds to the public vote. We will also be working with other Trade Associations to advise Government and Regulators. It is important that there is a focus on long term investment ensuring the continued success and stability of the UK’s £734 billion wealth management community for the country and its
· A WMA useful guide on Brexit can be found here
clients. We will be working with our member firms to assist you wherever possible with the challenges that will arise.
· The Brexit area on the WMA website can be found here
WMA will continue to visit Brussels and work closely with our contacts there to keep abreast of how the situation progresses.
Brexit: What Happens Now? Following the vote to leave, little or nothing will change immediately. The UK will remain a member of the EU for at least two further years - possibly more. During the time in which our new relationship with the EU is being determined, our member firms will still be subject to both UK and EU law and we will continue to work closely with both UK and EU authorities, regulators and government. There is no clear model for a post-Brexit relationship between the UK and the EU. Formal discussions about the form this will take will only begin after the UK Prime Minister notifies the President of the European Council under Article 50.
Post Brexit Financial Services Regulation It has been suggested that the leave vote will offer an opportunity to reduce the overall burden of financial services legislation and regulation on the UK industry. However, the UK gold-plates EU financial regulation by far more than any other member state. Also a good deal of such EU regulation begins life in the UK and is exported to Brussels for incorporation into legislation and re-exported back to the UK. As a result, Brexit will not necessarily mean a reduced regulatory burden on UK firms.
Brexit: Equivalence If the UK chooses to apply for third country equivalence status, the European Supervisory Authorities (ESAs) will need to declare its legislative environment as equivalent to the EU’s in order for its firms to do business directly with clients located in the EU. Equivalence status does not necessitate the UK implementing identical rulebooks to the rest of the EU – there is some flexibility – but they have to target similar outcomes in each individual circumstance. The UK would not be able to apply for equivalence until it is a third country – in other words, until after the Treaties cease to apply (as in Article 50, paragraph 3). It takes at least two years to be declared equivalent.
Brexit: Communicating with Clients Client communication in light of the Brexit vote is critical. It may be appropriate to plan a series of communications as well as having something to send out. The aim will be to reassure clients but also to manage their expectations as there will be uncertainties until the form of the UK’s future relationship with the EU becomes clearer. Clients can be reassured that in the UK regulations around the provision of the kinds of financial services that WMA member firms provide, such as advice, discretionary management, and broking services could well apply unchanged. Also the present parts of the surrounding framework that offer further protection to private investors, such as the compensation scheme, the complaints and ombudsman services, and the safeguarding of client assets, will all remain in place.
What is WMA up to?
WMA Tax Simplification Working Group On 16th June WMA hosted a meeting of several member firms to help identify areas of tax and tax reporting that could be simplified. Issues identified included removing quarter-up valuations for probates to bring them into line with the change to pensions in April 2015 and the removal of the need to deduct basic rate tax from relevant payments (such as on trail commission or compensation payments) to reduce administration, particularly in view of the Government’s new savings allowance. Also discussed was removing the requirement to retrospectively amend a CTV where US dividend payments get reclassified, usually after the company has been audited, and instead include in the tax year the change occurs. It was also noted that offshore fund reportable income remains administratively challenging for investors as the information from the Fund is not always easily available. Options discussed were the Fund to pay an accumulation dividend or HMRC to publish the relevant information on their website alongside the list of reporting funds. Some of these issues require discussion with others such as the Investment Association. Further meetings of the Working Group are planned in the next few weeks.
Legal Entity Identifiers At the third meeting of the WMA-LSE LEI User Group on 21st June, the LSE outlined a proposed commercial model that would enable WMA members to apply for an LEI on behalf of a legal entity such as a discretionary trust without having to send the paperwork to the LSE. Also discussed was how firms could apply for an LEI for non-discretionary trusts where the trust had an account with more than one WMA member firm. The LSE are looking for firms to complete certain data fields so they can do some analysis. LSE also provided a template which could be used by member firms to get the required authorisation from their entity clients to apply for the LEI on their behalf. Please contact Andy Thompson if you would like more information on any of the above.
What's coming up in our industry? London FinTech Week Members may be interested to know that the Fintech Week starts on 15th July and runs until 22nd July. This is a series of conferences, workshops, hackathons, meetups and networking. Each day has a focus on a different topic. The main conference/exhibition takes place at the Grange Tower Bridge Hotel, but other events take place across the City of London, Canary Wharf and “Tech City". Further information can be found here and WMA members are offered a 20% discount. Please enter this code to claim your discount: WMA1.
What's coming up in WMA?
The WMA FinTech Conference and Competition The WMA FinTech Conference is a one-day event which will provide attendees with a platform to discuss the advantages and potential risks of bringing technology and the Wealth Management industry closer together, for more information click here. We are also holding an open competition for firms to demonstrate their ‘Future of WealthTech Solutions’. For more information, please visit the website.
WMA Annual Summit 9th November 2016 The Grange Hotel Tower Bridge London, E1 8GP We are excited to launch the WMA Annual Summit 2016 which will be a unique opportunity to investigate the issues that impact the wealth management sector. Our closing conference speaker, Sir Ranulph Fiennes, will also be giving a talk on his experiences as one of Britain’s greatest explorers. For more information and to book, please visit the website.