PIMFA Weekly News Bulletin - 1 February 2021

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PIMFA WEEKLY NEWS BULLETIN | 1 February 2021 Dear Nigel,

Welcome to the PIMFA Bulletin; grab a coffee and take 10 minutes to read this week's latest industry news impacting you and your firm.

The Latest on Brexit

UK and Switzerland deepen financial services relationship On 27 January the Finance Ministers of the UK and Switzerland agreed the next steps for negotiations on a mutual recognition agreement between the two countries in the financial services sector. This should enable cross-border market access for a wide range of financial services in the areas of insurance, banking, asset management and capital market infrastructure. Earlier this month, the UK laid regulations aimed at granting share trading equivalence to Switzerland’s trading venues. Subject to parliamentary approval, this will come into force on 3 February 2021. Once the UK decision is in force it’s expected that the Swiss will reciprocate by removing restrictions on UK trading venues. UK Chancellor Rishi Sunak said that the UK and Switzerland, as global financial centres, have a shared commitment to high standards of regulation, market integrity and investor protection. The UK’s aim is to deliver one of the most comprehensive agreements of its kind in financial services as part of the plan to seize new opportunities in the global economy now the UK has left the EU.

Commission adopts equivalence decision for US CCPs On 27 January, the European Commission adopted an equivalence decision determining that the United States Securities and Exchange Commission (SEC) regime for US central counterparties (CCPs) is equivalent to EU rules. The decision is an important first step for US CCPs registered with the SEC to be recognised in the EU. It will allow such US CCPs to apply for recognition by the European Securities and Markets Authority (ESMA). Once recognised by ESMA, these US CCPs will be able to provide central clearing services in the EU. This decision complements the existing equivalence decision for US CCPs regarding the US Commodity Futures Trading Commission (CFTC), which was adopted in 2016.

ESMA resourcing needs to apply the IFR for third country firms The European Securities and Markets Authority’s (ESMA), has published its report containing the assessment of ESMA’s staffing and resources needs arising from the assumption of powers and duties in accordance with the new Markets in Financial Instruments Regulation (MiFIR) regime for third-country firms. The report is published following the changes to MiFIR regime for the provision of investment services, and activities in the EU by third-country firms, the Investment Firms Regulation (IFR), which entrusted ESMA with new responsibilities and powers for the supervision of third country firms providing investment services. ESMA said it could need €8.7M per year for 47 fulltime staff members to monitor 880 UK firms that or, under a less-costly scenario, they could need €5.9 million for 30 full time staff members to supervise 550 UK firms. The expansion depends on the EU granting the UK equivalence under MiFIR.

IMF World Economic Outlook - January 2021

According to the International Monetary Fund s (IMF) latest World Economic Outlook Update, the eurozone and UK economies will rebound slower than expected due to rising coronavirus infections and renewed lockdowns. In a report published on 26 January, the IMF lowered its forecasts for the 19-country euro area and the UK in 2021, still pointing to growth, just less than it expected last autumn. The global growth contraction for 2020 is estimated at -3.5%, 0.9 % point higher than projected in the previous forecast reflecting stronger than expected momentum in the second half of 2020. The strength of

the recovery is projected to vary significantly across countries, with the US and Japan projected to regain end-2019 activity levels in the second half of 2021, while in the euro area and the UK, activity is expected to remain below end-2019 levels into 2022. The wide divergence reflects differences across countries in behavioural and public health responses to infections, flexibility and adaptability of economic activity to low mobility, preexisting trends, and structural rigidities entering the crisis.

The Future of Advice

As part of PIMFA’s commitment to promoting a savings and advice culture that improves the financial and mental wellbeing of every UK consumer, PIMFA has published 12 recommendations in its Future of Advice policy paper that it believes will help create a thriving Industry Fit for the Future that offers Professional Advice for All. The policy recommendations set out by PIMFA today seek not only to recognise these issues, but to offer solutions that will help the advice industry adapt to the social and demographic changes taking place in Britain, ranging from an ageing population to working patterns changes, pension freedoms and growing digitisation within the advice industry.

PIMFA has already begun some of this work and called on the government to review the regulatory perimeter last year. In addition to giving the FCA the formal power and remit to recommend changes to the Treasury that would enhance its ability to meet its objectives in particular to prevent consumer harm. PIMFA also called for regulation of financial promotions as well as improvements to the supervisory regime.

Among PIMFA’s immediate priorities this year will be to lobby Government and to work with stakeholders across the industry, consumer groups and the Regulator to ensure that economic harms are included in the upcoming Online Safety Bill to provide greater protection to consumers from financial scams.

Common Shareclass Register

A Call for Input - Review of the UK's Funds Regime

The FCA's COBS 6.1H rules take effect on 1 February 2021 - these rules, confirmed via PS19/29, are aimed at

making it easier for consumers to move funds in specie from one platform to another. Members who are using the Common Share Register provided by the Investment Association (IA) to facilitate their implementation of the rules should be aware that the IA has been working with fund managers in recent weeks to verify

On 26 January the Treasury published a call for input – Review of the UK funds regime, seeking a response from market participants on a large number of suggestions and inviting stakeholders to provide views on which reforms should be taken forward and how these should be prioritised.

the data provided.

The overarching objective of the review is A final, verified version of the Register was published on 29 January. Postimplementation updates are planned for 15 February, 26 February and 31 March 2021.

to identify options which will make the UK a more attractive location to set up, manage and administer funds, and which will support a wider range of more efficient investments better suited to investors’ needs. The government is clear that any

https://www.theia.org/csr

tax reforms will be compatible with its robust approach on avoidance and

A Call for Input - Review of the UK's Funds Regime

evasion, and with the UK’s international commitments.

Any changes to the UK funds regime will This week saw the launch pf PIMFA’s new

support the UK’s commitment to upholding

Regulation and Operations Forums.

the highest standards of regulation and

These monthly webinars are open to all

appropriate supervisory oversight and

members and associates. They provide an

investor protection. Enhancing the

overview of the latest from the regulator,

reputation of the UK for fund location and

updates on hot topics from the PIMFA

administration go hand in hand with

team and select associates, an

cementing the UK’s status as a world-

opportunity to share best practice and get

leading hub for portfolio management.

the latest intelligence from behind the scenes.

The call for evidence is open until 20 April.

PIMFA intends to submit a response.

If you would like to attend please contact PIMFA's Committee Co-ordinator Heidi Bryant.

FREE Asset Allocation comparison report

The PIMFA Compare My Allocations report offers you a unique insight into our sectors model portfolios. For just 30 seconds work once a quarter, you can receive this 40 page report for FREE. For further details or to arrange a demonstration, please email indices@pimfa.co.uk.

PIMFA in the Press

Latest PIMFA Press Releases

Little regulators can do to stop fraud without action from Government

FSCS levy forecast of ÂŁ1bn compensation bill is scandal that shows regulation is failing both consumers and firms

PIMFA welcomes FCA warning on crypto-assets but calls for more to be done to protect consumers

PIMFA calls for FCA fines to contribute to FSCS until long term solution to the levy is agreed

PIMFA calls for urgent reform of supervision & FSCS levy to protect consumers & industry as it sets out a roadmap towards lower FSCS bills

Latest PIMFA Press Coverage

Financial Times: Financial scam compensation bill to cost ÂŁ1bn next year

Reuters: UK body sets billion-pound budget for COVID financial firm collapses

Daily Express: HM Treasury warned of 'national scandal' as FSCS forecasts skyrocket impacts explored Nasdaq.com: UK body sets billion-pound budget for COVID financial firm collapses

Yahoo Finance: UK body sets billion-pound budget for COVID financial firm collapses New Model Adviser: Pimfa slams ‘national scandal’ of £1bn FSCS bill

Latest PIMFA Consultation Response

PIMFA’s response to FCA: Call for Input on the Consumer Investment Market.

Read this and all other PIMFA consultation papers here.

EVENTS & LEARNING

PIMFA Training IS YOUR APPROACH TO VULNERABILITY FIT FOR PURPOSE? 23 February 2021 Fees: Member: £300 | Non-Member: £400 Bring a colleague along for FREE! Use code tcrewardb1g1f at checkout for a 50% discount on 2 tickets.

This practical live online learning session, underpinned by PIMFA member guidance

on vulnerability* and delivered by an experienced senior practitioner, will help your firm review your current approach to vulnerability in light of COVID-19 and recent regulatory announcements

In this live online learning sessions you will learn how to: •

Interpret what the FCA’s latest guidance on vulnerability means for your firm

•

Grasp the full extent of your regulatory obligations on vulnerability in light of COVID-19

•

Adopt the strategies and approaches leading firms take to developing and embedding a vulnerable-centric approach

•

Embed a culture that consistently supports vulnerable clients better than you do today

•

Adapt your firm’s products, services and processes towards the fair treatment of vulnerable clients

•

Critique, review and audit your approach to vulnerability measuring how well you serve vulnerable clients

Meet your Trainer: Caroline Wells – Customer Experience Expert As a pioneer of accessible and inclusive customer service, Caroline has worked with people in and around financial services for over 25 years. Along the way, Caroline has led teams to win coveted awards, including Public Service Organisation of the Year, Top 100 Index, Leaders in Diversity, and was shortlisted for the National Centre for Diversity’s Most Inspirational Individual Award in 2017. Having also played a significant role at the Financial Ombudsman Service in customer experience and outreach work, Caroline Wells is now applying her customer service and complaints handling expertise as a member of the Trust’s training and consultancy team.

For more info and to book your place, please click here.

*Member only - login required.

PIMFA Events INVESTMENT FIRM PRUDENTIAL REGIME BRIEFING 4 FEBRUARY 2021 Tickets: Member: £125 | Associate: £150 | Non-Member: £300

The FCA is designing a new prudential framework specifically for UK MiFID firms, but influenced by the Investment Firm Regulation and Investment Firm Directive being introduced in EU member states. The UK regime has been termed the Investment Firms Prudential Regime (IFPR) and will take effect from 1 January 2022.

It presents a range of challenges for firms covering capital, liquidity, risk management, remuneration, group consolidation, disclosure and reporting. In this 2 half-days virtual event, experts from PwC will share their insights with attendees on everything you need to know to ensure you are ready.

Discounts are available for group bookings of three or more, contact the the Events team on events@pimfa.co.uk

For more info and to book your place, please click here.

View all other upcoming PIMFA Events and Learning here.

What's Happening In Our Industry

FCA Proposes CMC Fee Price Cap

On 21 January the FCA published proposals to introduce a price cap on the fees claims management companies (CMCs) charge their customers in relation to claims for financial products and services. Currently, the fees paid by some consumers are not proportionate to the value they get from using CMCs, with some consumers paying fees of more than 40% of the redress they receive.

The proposals are part of the FCA’s broader business plan priority to ensure consumers are offered fair value products. They apply to the management of claims relating to financial services and products, except for PPI claims which remain subject to an existing cap of 20%.

The full press release is available here.

FCA: Information About Brexit from EEA Regulators

Following discussion with PIMFA and other bodies about how the FCA could help firms dealing with EEA regulators following the end of the Transition Period, the FCA have published links to their webpages and details of their transition regimes where relevant.

The links are available here.

Find Out More about PIMFA ...

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