PIMFA Weekly News Bulletin - 13 November 2023

View in browser Featured: FSCS reveals levy forecast for 2024/25, FCA Dear CEO letter, working groups and forums

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PIMFA WEEKLY NEWS BULLETIN 13 November 2023

FSCS Levy Forecast for 2024/25 The Financial Services Compensation Scheme (FSCS) has published its Outlook for November 2023, anticipating that the levy for 2024/25 will increase.

The current forecast for the next financial year is £415m.

According to the FSCS, the rise is partly due to lower surpluses being carried over next year. This figure is indicative and subject to change and is based on the FSCS’ expected compensation costs totalling approximately £457m during 2024/25.

Meanwhile, the 2023/24 levy remains as forecast in May 2023 at £270m, and no additional levy from firms is expected for the remainder of this financial year.

To read the Outlook in full, please visit the FSCS website.

Please contact Simon Harrington for more details.

FCA’s Dear CEO letter Expectations for firms on Financial Crime and meeting Consumer Duty outcomes The FCA’s Dear CEO letter for wealth management and stockbroking firms (8 November 2023), sets out their expectations for firms and notes their updated supervisory priorities of preventing financial crime and meeting Consumer Duty outcomes.

Financial Crime •

Firms are expected to have robust and effective systems and controls to counter financial crime and money laundering in a proportionate and risk-based way

•

SMF 16/17 holders should have the required experience, skills, and independence

•

Firms need to fully implement the FCA’s Financial Crime Guide: A firm’s guide to countering financial crime risks (FCG) and Financial Crime Thematic Reviews

Consumer Duty The FCA’s expectations of firms require meaningful changes to firm business, service and proposition to further drive good consumer outcomes. Firms should have fully implemented the Consumer Duty with the needs of consumers paramount.

The FCA outline areas of concern relating to Products & Services and Consumer Understanding, noting they expect firms to:

•

Have a clear focus of the needs and objectives of the target market, ensuring products and services remain aligned to consumer’s needs, risk profile and circumstances, with reassessment of the vulnerability status of consumer

Further concerns relating to Price and Value are set out, including firms charging for services which are not delivered (such as ongoing advice), with the FCA stating:

•

Firms should consider the value of their products and services, and regularly assess the overall cost and value for money and make changes when poor value is identified

•

Embedding the Consumer Duty into the day-to-day culture and running of your firm must remain a key focus

On FCA supervision and enforcement, the letter notes:

•

A new, dedicated financial crime function for consumer investments to focus on identifying firms with key fraud, scams or money laundering indicators

•

Consumer Duty will be used to intervene quickly against potential or actual consumers harms

•

FCA supervision will be more assertive, intrusive, proactive and data driven, with more short notice and unannounced visits with increased engagement on non-financial misconduct

Firms should also note that the FCA intend to send all firms a further data survey in December 2023.

PIMFA Webinar: The Autumn Statement (Member only) What are the implications for retail investors and a future general election?

27th November | 15:00 - 16:00 |Free The Chancellor has announced that the 2023 Autumn Statement will occur on 22 November 2023 as an update on the Government’s plans for the economy.

This Statement is of particular interest based on a possible general election being called in 2024. Join Iona Martin, Head of Private Banking Tax, KPMG, and David Ostojitch, Director of Government Relations and Policy, PIMFA, for an update on what the Autumn Statement includes and what it means for the wealth management and advice industry.

Book Now

Operational Resilience Working Group Next meeting: 14 November 14:00 - 16:00 The next PIMFA Operational Resilience Working Group meeting will take place via MS Teams on 14 November, starting at 2pm.

On the agenda for this meeting, the working group will be exploring:

•

Mitigating harms - what are the harms, how do you identify and manage them?;

•

FCA: Operational Resilience questionnaire should firms be answering based on their resilience, or should they include third parties?

•

Potential impact of AI on operational resilience

•

'What's in your in tray?

If you are from a PIMFA member or associate firm please joins us, get involved in the discussion and share your knowledge and experience with other firms who are working on operational resilience. To join this group and attend our meetings, please contact Kevin Sloane.

PIMFA Operations Forum Next meeting: 28 November 15:00 - 16:00 At the November Operations Forum, the London Stock Exchange will be presenting 'LSEG: Capital Markets and Regulatory Reform Update'.

If you are from a PIMFA member or associate firm and would like to be added to the distribution list to attend the next Operations Forum on 28th November please contact Heidi Bryant.

PIMFA Cyber Security Working Group Next meeting: 21 November 14:00 - 16:00 The next Cyber Security Working Group meeting will take place via MS Teams on Tuesday 21 November, starting at 2pm. Please note - this meeting is open to PIMFA members only.

On the agenda for this meeting, the working group will be exploring:

•

Mitigating harms - what are the harms, how do you identify and manage them?;

•

Unmasking the future: how threat actors are unleashing the power of AI in phishing and social engineering attacks - presentation by Jon Cosson, CISO and Head of IT, J M Finn

•

Quantum computing for finance - summary of recent presentation at the FCA's TACIG meeting

•

Compiling a 'We would never' list

•

'What's in your in tray?

If you are from a PIMFA member or associate firm please joins us, get involved in the discussion and share your cyber security knowledge. To join this group and attend our meetings, please contact Kevin Sloane.

PIMFA Consumer Duty Working Group Consumer Duty Management Information and Annual Board Reports Our next Consumer Duty Working Group meeting will take place on Monday 20th November at 10am.

This session will be led by our associates from Leaman Crellin and will focus on MI and Board Reports.

The objective of this discussion is to delve into key aspects and best practice of managing and reporting on the Consumer Duty, including expectations on how the Board should assess compliance in the Annual Board Report. Participants will explore various dimensions of this important topic, share insights, and address challenges.

Any members interested in joining the session please contact Alexandra Roberts or Yasmin Ataullah.

PIMFA AI Working Group Next meeting: 4 December 11:00 - 12:30 The next PIMFA AI Working Group meeting will take place via MS Teams on 4 December, starting at 11:00. We have invited Alix Cheema, Technology Consulting Leader at EY and EY EMEIA Nexus Leader

with Financial Services, to join us and present recent AI use cases and regulatory considerations for wealth management and financial advice firms, and to participate in a Q&A session.

If you are from a PIMFA member or associate firm would like to attend the meeting, please contact Kevin Sloane

Following March’s successful Roadshow, the PIMFA team are heading back to Bristol for another Regional on 14th December. This free event will provide attendees with the opportunity to hear rom subject matter experts on relevant industry topics (earn up to 3 hours Of CPD) and network.

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FCA update on application to approve financial promotions for unauthorised persons The FCA has opened the application window for firms to get permission to approve the financial promotions of unauthorised persons. The window will be open for three months until 6th February 2024.

From 7th February 2024, new legislation under the FSMA will take place requiring firms to get ‘approver permission’ to do so unless an exemption applies.

Visit the FCA website to read details on how to apply.

PIMFA Regulatory Forum

To reflect on the forthcoming Autumn statement, we have moved the Regulatory Forum to 28th November from 4pm to 5pm.

This monthly forum provides updates on regulatory hot topics from the PIMFA team and select associates, provide an opportunity to share best practice and get the latest intelligence on policy matters.

The PIMFA Forums are open to representatives from all PIMFA Members and Associate firms. If you or any of your colleagues would like to attend the Operations Forum and are not currently on our distribution list, please email Heidi Bryant.

FCA - Anti-fraud controls and complaint handling in firms The FCA has published key findings from their multi-firm review of how firms mitigate the risks of APP fraud and fraud attacks more broadly.

The publication includes examples of good practice and areas for improvement such as a greater focus on delivering good consumer outcomes and taking account of characteristics of customer vulnerability when making decisions about fraud claims and complaints.

The full report can be accessed here.

Treasury consultation response to "Financial Promotion Exemptions for HNWIs and Sophisticated Investors" The Treasury has published the consultation response to the CP looking to reform the financial promotion exemptions for HNWIs and sophisticated investors.

The consultation ran from December 2021 and March 2022.

The response contains the following updates from the proposals set out in the consultation:

•

Raising the financial thresholds to qualify for the exemptions to account for inflation.

•

Tightening other eligibility criteria to reduce the risk of capturing ordinary consumers.

•

Strengthening the statements that investors are required to complete when using the exemptions.

To read the consultation response in full, please visit the Treasury website here.

ISITC Europe T+1 Accelerated Settlement Challenges Roundtable Series In association with the CISI, the IA and PIMFA - kindly hosted by EY

With the US markets planning to move to T+1 for equities settlement in May 2024, and the UK Accelerated Settlement Taskforce looking at when the UK could follow suit, the ISITC Europe T+1 Forum has arranged a series of roundtables to facilitate an in-depth, cross-industry understanding of the business, technology and process challenges T+1 could bring to the UK market, and to explore potential solutions.

The roundtables are designed to increase industry knowledge and understanding of the impact of T+1 settlement, to explore potential solutions, assist with strategic planning and development, and to find a successful path to T+1 settlement implementation for everyone. The next T+1 roundtable is: Accelerated Settlement Challenges: Stock Borrowing / Lending and Collateral / Liquidity Management Date: 14 November 2023 - 12.30 (working lunch provided) hard start 12.45 - 14.15 Venue: EY, 25 Churchill Place, Canary Wharf, London, E14 5EY This roundtable will focus on the challenges facing stock borrowing and lending, collateral and liquidity management. Key issues for discussion include the difficulties of faster call backs and the challenges of maintaining real-time valuations, what happens if some lenders withdraw, what will be the impact on collateral and margin management, and will there be increased borrowing costs?

To register to attend this roundtable, please click here and watch Bulletin for further updates.

PRESS RELEASES

PRESS COVERAGE

PIMFA welcomes Financial Services

Reuters: OPINION: Hard work on

Compensation Scheme levy forecast

Online Safety Act is only just

for 2024/25

beginning - PIMFA UK Adviser: FSCS levy ‘barrier to

PIMFA continues to urge for FCA to have a role in combatting fraud

growth’ for firms, says PIMFA

PIMFA WealthTech partners with

Investment Week: FSCS warns

WealthOS in latest Tech Sprint on

industry levy set to rise to £415m for

the Client Onboarding process

2024/2

PIMFA celebrates winners of its third

Citywire Wealth Manager: Wealth

Diversity & Inclusion Awards

manager survey: Consumer duty ‘like wading through treacle’

READ MORE READ MORE

PIMFA LEARNING

12 December

22nd November

Webinar | 11:00 - 12:00 | Free

Training | 9:30 - 11:30 | £250 - £350

Subject Access Requests: How To Recognise, Handle and Respond Proportionately!

Financial promotions: fair, clear and not misleading in 2023 In this live online course, you will examine good

According to a recent survey, ‘60% of

and bad examples of recent promotional

professionals surveyed across financial

campaigns, assessing potential non-

services have reported an increase in DSARs

compliance of your current and future

over the past year’ and ‘51% have received

campaigns. By improving your grasp of good

complaints from data subjects about a data

practice, you will be better prepared to protect

subject access request (DSARs)’.

your firm, brand reputation, and competitive

advantage and respond rapidly to unexpected, In this FREE 60-minute webinar, Richard

consequential events. In this live, two-hour

Preece will speak to Chris Holme and Sarah

online session with Bovill’s Adam

Riceman from Clyde & Co. They have been

Strickland you’ll:

managing DSARs (including in relation to large disputes), and complaints, between them for 20

•

Assess the potential risks of your

years – and have a huge body of experience

marketing and financial promotions

around how to manage DSARs, the legal

against the FCA draft guidance

requirements, and the ICO’s expectations.

‘GC23/2: Financial promotions on social media’.

•

They will discuss how PIMFA member firms

promotions in-line with the

can: •

requirements of Consumer Duty.

React and respond to a DSAR with

•

professionalism and speed •

in line with the FCA’s PS22/10.

disclose any information the requester

•

Review control expectations for promotions of any high-risk investment

Ensure they are correctly identifying and redacting information so as to not

•

Strengthen your approach to financial

•

Use a proven processes to assess and

is not entitled to Identify when a

mitigate the threat of non-compliance

request is manifestly unfounded and

with current and future changes in

excessive and respond appropriately

financial promotion regulations •

Regardless of size, have effective

Ensure your approach to social media

management in place to efficiently

and customer communications doesn’t

respond to DSARs

attract the wrong kind of attention.

Be prepared for any regulatory scrutiny

•

Enhance the review and approval

and enforcement action when handling

process for financial promotions in line

DSARs

with proposed new anti-greenwashing rules.

•

BOOK NOW

Update your social media and influencer marketing governance, policies, and contracts with ‘finfluencers’ and agencies to ensure your firm doesn’t fall short of the guidance the regulator has in place to stop consumer harm.

BOOK NOW

Please note that responses to this email address are not monitored. If you wish to get in contact, please email info@pimfa.co.uk

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