PIMFA Weekly News Bulletin - 11 January 2021

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PIMFA WEEKLY NEWS BULLETIN | 11 January 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

Brexit Deal Agreed

The UK and EU reached a zero-tariff, zero-quota free trade agreement on 24 December 2020, just a week before the Brexit transition period was due to end. After months of torturous negotiations, the two sides have agreed a Trade and Cooperation Agreement, an Agreement on Nuclear Cooperation and an Agreement on Security Procedures for Exchanging and Protecting Classified Information. These Agreements are designed to honour the instruction of the British people, expressed in the referendum of 2016, to take back control of the UK laws, borders, money, trade and fisheries. It changes the basis of the UK’s relationship with the EU after more than 40 years of the UK’s EU membership. Royal Assent was granted to the European Union (Future Relationship) Act on 30 December, after the European Union (Future Relationship) Bill had received a green-light in both houses. The Prime Minister thanked MPs and peers for passing the European Union Future Relationship Bill in one day and said that “the destiny of this great country now

resides firmly in our hands.”

With Brexit, freedom to work and live between the UK and the EU has come to an end and, from this year, UK nationals will need a visa if they want to stay in the EU for more than 90 days in a 180-day period. Northern Ireland will continue to follow many of the EU's rules in order to avoid a hardening of its border with the Republic of Ireland. Level playing field rules commit both the UK and the EU to maintain common standards on workers' rights, social and environmental regulations. The UK has also agreed to stick to common principles on how state aid regimes work. The European Court of Justice will not have jurisdiction in the UK. Arrangements are still to be agreed on data sharing and the agreement on fishing only lasts five years. The UK-EU deal does not provide any new transition period for financial services and the two sides will have to provide access to each other’s markets through equivalence decisions.

Derivatives Trading

On 31 December the FCA issued a statement on easing the rules for derivatives trading to avoid market ruptures after Brexit, and said it was amending its position to prevent branches of EU firms in London becoming subject to both EU and UK requirements. UK firms are now able to trade derivatives on EU venues on behalf of clients within the EU. The FCA continues to view the agreement of mutual equivalence between the UK and EU as the best way to avoid disruption for market participants and avoid fragmentation of liquidity in DTO products, reducing costs for investors. This modification of the application of the UK DTO applies to UK firms, EU firms using the UK’s temporary permissions regime (TPR) and branches of overseas firms in the UK.

Transactions concluded by an EEA Undertakings for the Collective Investment in Transferable Securities (UCITS) fund or an EEA Alternative Investment Fund (AIF) are currently outside the scope of the UK DTO. This relief under the TTP does not apply to trades with non-EU clients, proprietary trading conducted, for example, to hedge a firm’s own risk exposure, and trades between UK branches of EU firms.

These trades remain subject to the UK DTO.

Data Protection

The EU-UK Trade and Cooperation Agreement contains a bridging mechanism that allows the continued free flow of personal data from the EU/EEA to the UK for up to 6 months after the transition period ends, until adequacy decisions come into effect.

EU adequacy decisions for the UK would allow for the ongoing free flow of data from the EEA to the UK.

As a sensible precaution, during the bridging mechanism, it is recommended that you work with EU/EEA organisations who transfer personal data to you to put in place alternative transfer mechanisms to safeguard against any interruption to the free flow of EU to UK personal data. For most organisations, the most relevant of these will be Standard Contractual Clauses (SCCs).

HM Treasury consultation on the Future Regulatory Framework

How does your asset allocations compare to others?

Are your firms' model portfolio The response deadline for this HM

allocations higher or lower than

Treasury consultation has been

your peer group?

extended by a month to 19 February 2021. PIMFA are currently working

Find out with the PIMFA Compare

on our response in conjunction with

My Allocations report, FREE for

our committees.

participating member firms.

An initial draft of our response is

To get your firms copy, email

available for PIMFA members to

indices@pimfa.co.uk

review and provide feedback on. If you would like to see the draft, please contact Sarah McGuffick.

Directory Persons Submissions: FCA show and tell sessions for solo regulated firms

Firms must submit their Directory Persons data via Connect by 31 March 2021.

Firms who want to submit using the multiple add or amend form, must do so by 18 March 2021 ahead of the deadline.

The FCA will be running four 'Show and Tell' sessions across January and February on Microsoft Teams to assist solo regulated firms. The sessions will aim: •

To give a background to the Directory Persons programme & firms’

responsibilities •

To provide an overview of the firm journey

•

To demonstrate a single and multiple submission

•

To take Questions and Answers

The sessions will take place on the following dates: Session Date

Time

Respond by

Tuesday 19 January

3-4pm

Tuesday 12 January

Wednesday 27 January

2-3pm

Wednesday 20 January

Tuesday 9 February

10-11am

Tuesday 2 February

Thursday 25 February

11-12noon Thursday 18 February

The sessions are open to solo regulated firms via PIMFA and the slots are on a first come, first served basis. The numbers are limited so only one representative per firm can be accommodated. If you are interested in attending, please supply your name, job title, organisation and email address and which session you are interested in to Alexandra Roberts.

PIMFA in the Press

Latest PIMFA Press Releases

PIMFA Press Coverage

PIMFA calls for FCA fines to

Professional Adviser: Watch -

contribute to FSCS until long term

Interview with PIMFA's Simon

solution to the levy is agreed

Harrington on regulatory fees and lobbying for change

PIMFA calls for urgent reform of supervision & FSCS levy to protect

FT Adviser - MPs rebuke 'litany of

consumers & industry as it sets out

failings' at FCA

a roadmap towards lower FSCS bills Professional Adviser - Tim Fassam: PIMFA disappointed to learn of

Why the FCA should embrace quick

supplementary costs to be levied on

FSCS wins

members by FSCS International Adviser - FCA admits PIMFA sets out priorities for the

‘mistakes’ in mini-bond and

future as it updates member

collapsed fund scandals

manifesto EU Bankers - PIMFA comments on PIMFA hosts first in series of

the independent investigations into

masterclasses to encourage young

the FCA's supervision of LCF &

women from all backgrounds to

Connaught

consider a career in finance

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 SM&CR: GETTING YOUR FIT AND PROPER ASSESSMENTS RIGHT FIRST TIME 14 January 2021

In this live online learning sessions (comprising of 2 x 2.5-hour sessions) we will help you: •

Define competence and capability

•

Develop the skills to observe, listen and capture evidence all at the same time!

•

Conduct a feedback session

•

Build a portfolio of evidence to demonstrate an individual’s competence and capability

•

Build a development plan that is SMART

Who should attend?

Anyone who is about to be, or has been recently appointed, into a role that requires skills in assessing the competence and capability of others. It can also serve as a refresher for those in existing positions.

It is ideal for those caught within the scope of the Certification Regime performing a role of supervisor and/or are responsible for the assessment of another individual’s fitness and propriety.

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

SM&CR – FCA Update Expectations

On the 18th December the FCA published an update of its expectations for solo regulated firms in relation to SM&CR and Covid-19. In April 2020, the FCA had offered some additional flexibility to firms in the application of the SM&CR rules in light of the Covid-19 pandemic.

The current expectation is that firms’ application of the SM&CR rules returns to normal. Some of the provisions providing flexibility ended on 7th January 2021 and the relevant modifications by consent will end on 30th April 2021. A similar update has been issued for firms using Appointed Representatives.

The full details can be be found in the FCA updates below: FCA December 2020 update – SM&CR and COVID-19: our expectations for soloregulated firms FCA December 2020 update – Approved Persons Regime and COVID-19: our expectations

FCA Publishes Coronavirus Financial Resilience Survey Data

The FCA has published the results of its coronavirus (Covid-19) financial resilience surveys. The surveys were sent to solo-regulated firms to inform the FCA of the impact of coronavirus on firms’ financial resilience. In response to the crisis, the FCA has been monitoring the effects of the economic downturn on firms’ solvency by rapidly increasing the data it collects on firms.

The survey results show that between February (pre-lockdown) and May/June (during the impact of the first lockdown), firms across the sectors experienced significant change in their total amount of liquidity. This was defined as cash,

committed facilities and other high-quality liquid assets. Three sectors saw an increase in liquidity between the two reporting periods: Retail Investments (8%), Retail Lending (8%) and Wholesale Financial Markets (83%), the latter seeing the greatest increase.

The other 3 sectors saw a decrease in available liquidity: Insurance Intermediaries & Brokers (30%), Payments & E-Money (11%) and Investment Management (2%).

When asked whether they expected coronavirus to have a negative impact on their net income, 59% of respondents had said that they did. Of these, 72% expected the impact to be between 1% and 25%. Three percent expected the impact to be 76%+ within the next 3 months of the survey being taken.

New FCA Covid-19 Impact Survey

The FCA are now repeating their Covid-19 Impact Survey for a third time and are planning to send it to the relevant firms in Tranche 1 on one of the following dates:

Batch 1: to be sent on 13 January 2021 - response due by 3 February 2021 Batch 2: to be sent on 14 January 2021 - response due by 4 February 2021 Batch 3: to be sent on 15 January 2021 - response due by 5 February 2021 Batch 4: to be sent on 19 January 2021 - response due by 9 February 2021

FCA will send a email to all the firms at least one day prior to them receiving the survey. Completion of the survey is mandatory under section 165 of the Financial Services & Markets Act (FSMA) 2000.

CFTC and ESMA clearing deal

The US Commodity Futures Trading Commission (CFTC) and the European Securities and Markets Authority (ESMA) have signed a Memorandum of Understanding (MOU) regarding cooperation and the exchange of information with

respect to certain registered derivatives clearing organizations established in the US that are CCPs recognized by ESMA under the European Market Infrastructure Regulation (EMIR).

The MOU reflects ESMA’s and the CFTC’s commitment to strengthening their mutual cooperative relationship. Chair of ESMA’s CCP Supervisory Committee Klaus Löber said that this MOU sets out the basis for the enhanced collaboration between the two institutions and is an important step towards building the risk-based and outcomefocused supervision of CCPs in accordance with the amended European Market Infrastructure Regulation.

Homes England: Help to Buy Equity Loan - New Scheme Video

Homes England have recently issued guidance on the new Help to Buy: Equity Loan (2021-2023) scheme, in video form, available here. For further information, please contact Abby Hartlebury.

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