PIMFA Weekly News Bulletin - 11 April 2022

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PIMFA WEEKLY NEWS BULLETIN | 11 April 2022 Dear Nigel,

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

British Steel Redress Scheme

PIMFA are still considering our approach on responding to the proposed British Steel Redress Scheme and some of our member firms have expressed an interest in forming a working group to discuss the proposals. Should this be of interest to you, please contact Simon Harrington.

FCA Sets Out Three Year Strategy

The FCA has outlined its 3 year strategy to improve outcomes for consumers and markets more broadly. Whilst much of the information outlined in the document relates to activities which the FCA has already undertaken or is currently undertaking, it is indicative of an approach by the Regulator which seeks to be more transparent in its actions. The publication of outcomes and performance metrics, to which the FCA will hold itself accountable, is further proof of this.

PIMFA continues to engage constructively with the FCA on its new strategy as well as on ancillary work such as its Consumer Investment Strategy (a key pillar of this strategy) and will continue to do so. If you have any queries on this, please contact Simon Harrington.

PIMFA Private Investor Indices Survey

The next PIMFA Private Investor Indices Survey opens at 9am today and closes at 5pm on 27th April.

Please click here to complete the survey.

PIMFA's Latest Consultation Responses

Our latest Consultation Responses include PIMFA's response to: •

The FCA's Quarterly Consultation No 35 – CP 22/4

•

The FCA Compensation Framework Review

•

FCA’s Call for Evidence on Improving the Appointed Representatives Regime

Read these and all other PIMFA consultation papers here.

Latest PIMFA Press Releases

Latest PIMFA Press Coverage

PIMFA’s Diversity & Inclusion Awards

New Model Adviser: Podcast: British Steel

return for second year and open for new

redress scheme could fuel DB transfer

entries

claim frenzy

National Audit Office report sets out how

Lexology: How HR in financial services

British Steel Pension members were failed

can contribute to ESG goals

in stark detail BBC: Grieving families face extra fees and FCA sets out aims to increase consumer confidence in investment market at

paperwork, says consumer group

PIMFA’s Virtual Fest 2022

FT Adviser: Marlene Outrim: ‘A lot of what the FCA is doing is with a broad brush’

FCA willingness to engage on FSCS is positive, but real progress sits with the

Daily Telegraph: Is Bitcoin a good

Government

investment in 2022?

PIMFA’s Virtual Fest adds Shadow

FT Adviser: Pensions freedoms and BSPS

Economic Secretary to the Treasury Tulip

created 'financial feeding frenzy'

Siddiq as second keynote speaker

PIMFA Events

PIMFA EVENT: FINANCIAL CRIME CONFERENCE 18 May 2022 As the financial crime landscape evolves with new techniques and technologies, the growing threat to firms and their clients is undeniable.

This conferences gives attendees access to industry leading insights and debates from professionals across the regulatory, law enforcement, innovators and providers in the Financial Crime space, to help firms better understand and combat these threats.

To find out more and register, please click here

PIMFA DIVERSITY & INCLUSION AWARDS ENTRIES ARE OPEN The Awards are FREE to enter and open to all firms and stakeholders in the sector you do not have to be a PIMFA member to enter.

Click here to find out more and enter

PIMFA Learning

14 April | 11:00 - 12:00 | FREE TO ATTEND

Year-end tax returns provide the ideal opportunity for Wealth Managers to demonstrate value simplifying the tax return process of high-net-worth clients they serve.

In this FREE 60-minute webinar Aiden Corcoran, Personal Tax Senior at GoSimpleTax, explains how PIMFA member firms can, from a tax perspective, better serve their clients delving into Cryptocurrency whilst providing much-needed support on Inheritance tax and pensions.

In this webinar, we discuss how Wealth Managers can: • Offer tax planning to boost the value of their service.

• Understand further serve and understand their clients’ needs regarding Crypto Tax and Pensions.

• Work with their HNW clients on inheritance tax and/or EIS, SEIS and VCT

Please click here to register

View Upcoming PIMFA Events & Learning here

Partner Events

18th ANNUAL AML & FINANCIAL CRIME SEMINAR 27 - 28 April Join us at the seminar hosted by Herbert Smith Freehills, providing essential updates from the Home Office, FCA, HMRC, OFSI, FCDO, JMLSG, Companies House, CPS, Met Police and leading cross-industry experts!

The full programme and speaker faculty can be viewed here.

Please click here to register and use code 'PIMFA' to get a 10% discount.

PIMFA Associate Members Worksmart Acquired by Davies Group

Worksmart are delighted to announce that they have been wholly acquired by the Davies Group, a multi-award-winning specialist professional services and technology business, giving them more opportunity to offer their expertise and insight on regulatory change in the financial services sector.

The full story can be read here.

FCA Business Plan 2022/23

The FCA has published its Business Plan 2022/23 which explains their programme of work for this year to achieve the regulator’s three-year strategy. It outlines the key work the FCA will do over the next 12 months to deliver these outcomes, how it will measure progress and also provides examples of its work as the external environment is changing rapidly.

The longer term impact of of Covid, low levels of financial resilience and rising costs mean many people are at risk of serious financial problems. And this is happening against a backdrop of rising inflation and interest rates and major geopolitical uncertainty, these factors will be felt by consumers and firms over the coming year and beyond. In the plan the FCA says it will continue to monitor these issues and adapt the plans where necessary, and that by focusing more on end outcomes, and working across sectors and markets, they will be "better able to respond to new issues and macroeconomic challenges". It also says this new, more adaptive approach to allocating resources and monitoring its performance will make the FCA more agile and help it respond more quickly to market needs.

The Regulator has grouped its commitments into three areas: •

reducing and preventing serious harm, with a focus on protecting consumers from the harm that authorised firms can cause, including tackling fraud and poor treatment;

•

setting and testing higher standards – focused on the impact that authorised firms’ actions have on consumers and markets.

•

promoting competition and positive change – the FCA wants to use competition as a force for better consumer and market outcomes.

The FCA also says it will support UK growth and innovation that serves society, underpinned by widely recognised and respected high standards, and that all firms are expected to adopt these same high standards, and have an open and cooperative approach.

FCA publishes 'Our Positive Impact' document

The FCA has published 'Our Positive Impact 2022', a paper setting out for the first time how the regulator provides public or societal value by providing quantified estimates of the positive impact of a subset of its activities – policy interventions and enforcement work.

The intention is that this document becomes a regular publication where the FCA estimates its annual positive impact on a rolling average over a 3-year period. Quantifying the benefits of the regulator’s activities is inherently difficult as much of the impact is not financial but in the prevention of harm that may otherwise have been caused.

Over time, the FCA aims to include in the estimates the positive impact of other work, for example authorisation or supervision. The FCA also wants to refine the evidence it presents, for example the methodology for estimating benefits. This will help demonstrate value for money and shape the regulator’s priorities.

Building a digital Regulator: How the FCA is riding the innovation wave

In a speech delivered on 4 April, Jessica Rusu, Chief Data, Information and Intelligence Officer at the FCA, said that technological innovation has changed our lives and how we interact with each other, resulting in an explosion of data, which in turn has become a key driving force for financial innovation.

As a regulator, the FCA must foster innovation, be intelligence led and prepare for the future. The FCA’s new unified firm support service ‘Innovation Pathways’ will play a key role in informing and ensuring that the regulatory environment is fit for future innovation.

Future CryptoSprint and APP Fraud TechSprints will help to support innovation while protecting consumers in a rapidly changing world.

There are three themes at the centre of the FCA’s work to ensure it can effectively carry out its role as a regulator: •

fostering innovation – to create an enabling environment for innovation in financial services, while proactively scanning the horizon to get on the front foot of emerging issues;

•

being intelligence-led – to leverage data science and advanced analytics to inform the decision-making process and help regulate at scale;

•

and preparing for the future – providing insights to ensure that our regulations are fit for purpose in a rapidly changing market.

Government sets out plan to make UK a global cryptoasset technology hub

The government has announced plans that will see stablecoins recognised as a valid form of payment as part of wider plans to make the UK a global hub for cryptoasset technology and investment.

Stablecoins are to be brought within the regulatory perimeter, paving the way for their use in the UK as a recognised form of payment. This announcement is part of a series of measures to make the UK a global hub for cryptoasset technology and investment.

Measures include legislating for a ‘financial market infrastructure sandbox’ to help firms innovate, an FCA-led ‘CryptoSprint’, working with the Royal Mint on an NFT, and an engagement group to work more closely with industry.

This is part of a package of measures to ensure the UK financial services sector remains at the cutting edge of technology, attracting investment and jobs and widening consumer choice.

EU – European Commission adopts disclosure rules on sustainable investments

On 6 of April, the European Commission adopted regulatory technical standards to be used by financial market participants when disclosing sustainability-related information under the Sustainable Finance Disclosures Regulation (SFDR).

The Delegated Regulation specifies the exact content, methodology and presentation of the information to be disclosed, thereby improving its quality and comparability. Under these rules, financial market participants will provide detailed information about how they tackle and reduce any possible negative impacts that their investments may have on the environment and society in general.

These new requirements will help to assess the sustainability performances of financial products. Compliance with sustainability-related disclosures will contribute to strengthening investor protection and reduce greenwashing. This will ultimately support the financial system’s transition towards a more sustainable economy.

The requirements will now be subject to scrutiny by the European Parliament and the Council. They are scheduled to apply from 1 January 2023.

EU – ESG Funds Provided Better Returns for Investors in 2020

The European Securities and Markets Authority (ESMA), has published its fourth annual statistical report on the cost and performance of EU retail investment products. A new finding this year is that UCITS with an environmental, social and governance (ESG) strategy outperformed their non-ESG peers and were also overall cheaper. The Report examines the market over the ten-year period ending in 2020 and finds that, while costs show signs of reducing in certain jurisdictions, in most Member States there is limited

progress in funds becoming more affordable. Retail investors also continue to pay higher fees than professional investors.

UCITS costs only marginally declined over time and average gross UCITS fund performance varied significantly. Retail clients paid on average around 40% more than institutional investors across asset classes. Higher risk exposures entailed higher costs, irrespective of the asset class. Costs were higher for active equity and bond UCITS compared with passive and ETFs.

There was net underperformance of active equity and bond UCITS on average, compared with passive and ETFs. Top-25% active equity UCITS outperformed compared to the top25% passive and related benchmarks, at shorter horizons. ESG outperformed non-ESG equity UCITS, mostly due to sectoral factors, and were slightly cheaper.

Retail AIFs showed high return volatility across these years. Total costs were largely attributable to entry costs and varied substantially by country and payoff type. There was little difference in simulated returns between moderate and favourable performance scenarios, and comparability across Member States remained limited. Heterogeneity and data availability issues persisted, as well as lack of harmonisation in national regulation.

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