PIMFA Weekly News Bulletin - 22 March 2021

PIMFA WEEKLY NEWS BULLETIN | 22 March 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

EU starts legal proceedings against the UK over Northern Ireland protocol breach

On 15 March, the European Commission started a formal infringement process against the UK by sending a letter of formal notice for breaching the provisions of the Protocol on Ireland and Northern Ireland, as well as the good faith obligation under the Withdrawal Agreement. The letter requests the UK carry out swift remedial actions to restore compliance with the terms of the Protocol. The UK has one month to reply to the letter.

Further, European Commission Vice-President Maroš Šefčovič has sent a letter to David Frost, the UK's co-chair of the Joint Committee, calling on the UK government to rectify and refrain from putting into practice the statements and guidance published on 3 and 4 March 2021 with which the UK unilaterally delayed the introduction of new sea border checks on food, parcels and pets. The letter also calls on the UK to enter into bilateral consultations in the Joint Committee in good faith, with the aim of reaching a mutually agreed solution by the end of this month.

French AMF position regarding the Alternative Investment Fund Managers Directive (AIFMD) review

Brexit has intensified scrutiny of the EU’s funds sector as many EU investment funds delegate portfolio management to London. Ahead of the AIFMD’s review, French financial regulator the Autorité des Marchés Financiers (AMF), outlined its recommendations for a more effective supervision of alternative investment fund managers. The AMF said that AIFMD has been successful in creating an efficient internal market for Alternative Investment Funds but some vulnerabilities remain such as the fragmentation of supervisory responsibilities amongst several national competent authorities in the case of AIFMs acting under the management passport, the functioning of delegation or the heterogeneous availability of Liquidity Management Tools (LMTs) across jurisdictions in the absence of harmonised rules in the EU.

The AMF said that certain types of extensive delegation arrangements, such as those where fund managers solely provide middle and back-office services without retaining any portfolio management expertise, should be scrutinized to ensure AIFM and UCITS managers remain ultimately in charge of the key business functions and decisions.

The Irish €100bn market breaks link with London post- Brexit

On 18 March, Irish Minister for Finance Paschal Donohoe, who is also president of the Eurogroup, welcomed successful migration of Irish securities settlement from the UK CREST system to Euroclear Bank Belgium. The migration means that the settlement of trading activity on Euronext Dublin of €100 billion of assets across 50 listed companies will now take place in Euroclear Bank Belgium Central Securities Depository (CSD), after decades of association with London. Donohoe said the move “will ensure that Irish companies can continue to access funding from the capital markets and help ensure Ireland’s place in the EU capital markets.”

New IRSG report - Global Solutions to Global Problems

The International Regulatory Strategy Group (IRSG), an advisory body to the City of London Corporation and TheCityUK, published a report on 18 March 2021 which argues the case for a renewed commitment to “global solutions to global problems”, with practical examples on where market fragmentation may give rise to financial instability and other risks. Global Solutions to Global Problems: Promoting Regulatory Coherence in Financial Services for Pandemic Recovery, makes recommendations as to how local

and international bodies can ensure this principle remains central to their work in the coming months and years.

It makes recommendations in three specific areas – to foster operational resilience, to encourage innovation in digital governance and to incentivise sustainable finance. The report does not focus on the EU’s stance on equivalence but argues that global regulatory coherence and consistent implementation of global standards in a way that fosters crossborder activity, encourages fair and open competition, benefiting customers, firms and their regulators alike. This, the report argues, is good for economic growth and good for financial stability.

ESAs consult on Taxonomy related product disclosures

The European Supervisory Authorities (EBA, EIOPA and ESMA ) have issued a Consultation Paper seeking input on draft Regulatory Technical Standards (RTS) regarding disclosures of financial products investing in economic activities that contribute to an environmental investment objective. These economic activities are defined by the EU Taxonomy Regulation. The proposed draft RTS aim to facilitate disclosures to endinvestors regarding the investments of financial products in environmentally sustainable activities and create a single rulebook for sustainability disclosures under the Regulation on sustainability-related disclosures in the financial services sector (SFDR) and the Taxonomy Regulation. This will be done by amending the draft RTS under the SFDR, to minimise overlapping or duplicative requirements between the two regulations. The consultation closes on 12 May 2021.

ESAs consult on Taxonomy related product disclosures

The European Supervisory Authorities (EBA, EIOPA and ESMA ) have issued a Consultation Paper seeking input on draft Regulatory Technical Standards (RTS) regarding disclosures of financial products investing in economic activities that contribute to an environmental investment objective. These economic activities are defined by the EU Taxonomy Regulation. The proposed draft RTS aim to facilitate disclosures to endinvestors regarding the investments of financial products in environmentally sustainable activities and create a single rulebook for sustainability disclosures under the Regulation

on sustainability-related disclosures in the financial services sector (SFDR) and the Taxonomy Regulation. This will be done by amending the draft RTS under the SFDR, to minimise overlapping or duplicative requirements between the two regulations. The consultation closes on 12 May 2021.

Latest PIMFA Press Releases

PIMFA welcomes continued relaxation of 10% rule and consultation on permanent change

Latest PIMFA Press Coverage

IFA Magazine: PIMFA welcomes continued relaxation of 10% rule and consultation on permanent change

PIMFA backs calls for financial harm to be included in Government’s Online Safety Bill

The i newspaper: Government’s Joint Fraud Taskforce quietly taken back under Home Office control

PIMFA, Which?, UK Finance, FSCS and Work & Pensions Select Committee Chair Rt. Hon. Stephen Timms MP call for economic harm to be included in the Government’s forthcoming Online Safety Bill

The Herald Scotland: Inquiry into Pioneer Mutual bank collapse as savers refunded £3.3m two years after auditors warned of its future as a going concern

Professional Pensions: Pensions minister

FCA recognises need to ‘up our game’ and admits FSCS levy is ‘unsustainable’

writes to schemes for scam support; regulators and trade bodies push for legislative change

at PIMFA Virtual Fest Wealth Adviser: PIMFA backs calls for Empowering female talent through authentic leadership, forums and career

'financial harm' to be included in UK Government's Online Safety Bill

masterclasses

PWC publish two new Operational Resilience papers

PIMFA Associate Member PWC has published two useful papers on operational resilience which you may find interesting:

1.

Defining your business services – this paper explores the process of identifying

important business services. There are sector-specific papers dedicated to different financial services areas, including wealth management.

2.

Preparing for new UK policies – this paper sets out simple practical steps for firms to

take when the FCA Policy Statement on operational resilience is published.

Global Financial Centres Index 29

New York again headed the rankings in the Global Financial Centres Index 29, launched

by Z/Yen Group in partnership with the China Development Institute (CDI) in London and Hong Kong. London remains second, only one point ahead of third place Shanghai. Hong Kong moved up a place to fourth, one point behind Shanghai, with Singapore in fifth position. Tokyo dropped three places from fourth to seventh. Frankfurt replaced San Francisco in the top 10, gaining seven rank places.

EVENTS & LEARNING

PIMFA Event FINANCIAL CRIME & CYBER RESILIENCE CONFERENCE 2021 21-22 April 2021

Early-Bird Rates (Available until 31 March): Member: £75 Non-Member: £150

The PIMFA Financial Crime & Cyber Resilience Conference is a 2-day event where attendees will have access to industry leading debates from professionals across the regulatory, law enforcement, innovators and providers in the Financial Crime and Cyber Security space.

For more info and to book, please click here.

View all other upcoming PIMFA Events and Learning here.

FCA announce Supervisory flexibility on RTS 27 reports and 10% depreciation notifications

The FCA are putting in place temporary measures with respect to RTS 27 reports and 10% depreciation notifications while they consult on changes to these requirements later this Spring. These temporary measures will be in place until the end of 2021.

They expect that by the end of 2021 they will have concluded their policy consideration of the future of both reporting obligations.

Further information on both items can be found here and they look forward to your input as part of the consultation process.

PIMFA's Consultation Responses & Member-Only Guides

PIMFA’s latest Consultation Response is to HM Treasury on the Future Regulatory Framework Review. Read this and all other PIMFA consultation papers here.

PIMFA also regularly produces member only guides on key industry topics such as remuneration, vulnerable clients, cyber resilience, pension transfer advice etc.

Members can log in and access these guides at https://www.pimfa.co.uk/members/commspublications/guides-for-members/

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