PIMFA Weekly News Bulletin - 26 October 2020

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PIMFA WEEKLY NEWS BULLETIN | 26 October 2020 Dear Nigel,

Welcome to the PIMFA Bulletin outlining the latest industry news and updates. Grab a coffee and take 10 minutes to read this week's highlights and key issues affecting you and your firm

LATEST NEWS

Brexit Negotiations

UK – EU Joint Committee Meeting

The two chief Brexit negotiators, the UK’s David Frost and the EU’s Michel Barnier,

The UK and EU Joint Committee under

have broken last week’s deadlock in the

the Withdrawal Agreement met in London

talks and agreed to continue with

on 19 October. The two sides, led by

negotiations in London this week. From

Cabinet Office Minister Michael Gove and

22–25 October the two teams will

European Commission Vice President

negotiate all issues simultaneously as well

Maroš Šefčovič, agreed that contacts at all

as work on legal texts, in an attempt to

levels will significantly intensify on the

make faster progress in those areas

implementation of the Brexit Withdrawal

where the two sides are more closely

Agreement. After the meeting, Michael

aligned.

Gove gave an update to the House of Commons on the Government’s

EU Chief Negotiator Michel Barnier

negotiations with the EU and the work of

addressed the European Parliament

the UK-EU Joint Committee.

before travelling to London and said that the EU “will seek the necessary

While much remains to be resolved before

compromises on both sides in order to

the end of December, he said the two

reach an agreement.” For the UK, this was

sides have made substantial progress on

a welcome acknowledgment of the

implementation and are committed to an

Government’s view that there has to be

accelerated tempo of discussions via the

movement on both sides to reach a deal.

Specialised Committees. Vice-President

In the coming weeks, the talks will be held

Šefčovič welcomed the clear political steer

daily and over weekends.

and commitment given by Michael Gove, so that the EU and the UK can reach

Lead negotiators in various workstreams

mutually agreed solutions on all

will try to make progress as quickly and

outstanding issues on the table, in

identify where the two legal texts agree.

particular with regard to the Protocol on

A new Joint Secretariat will then need to

Ireland and Northern Ireland. In this

come up with a consolidated text and

context, it was agreed that contacts at all

methodology to go through all the legal

levels will significantly intensify. It was

points. While officials will try to make a

also agreed that the next meeting of the

breakthrough in the most difficult areas, such as state aid and fisheries, it is likely

that the final push will have to come

Joint Committee would take place in mid-

through political intervention on both

November.

sides.

Moody's Downgrades the UK’s Financial Services Bill

Credit Rating

HM Treasury has introduced the Financial

Moody’s has lowered the UK’s sovereign

Services Bill into the House of Commons,

debt rating from Aa2 to Aa3. The credit

receiving its First Reading on 21 October.

rating agency said the downgrading was a

A date for Second Reading has not yet

consequence of a decline in economic

been scheduled, but the Bill is expected to

strength due to the coronavirus pandemic

receive Royal Assent prior to the end of

and Brexit uncertainty. In Moody’s view,

the Brexit transition period on 31

even if there is a deal between the UK and

December.

EU by the end of 2020, it will be narrow in scope, and the UK’s exit from the Brexit

In a broad sense, the Bill looks to ensure

transition period will continue to put

that the UK's regulatory framework will

downward pressure on private investment

continue to function following the UK's

and economic growth. Moody’s said that

withdrawal from the EU, and put in place a

the public finances in the UK would

number of changes to "maintain its

worsen as a result of the pandemic, but it

effectiveness, enhance the UK's world-

expected the overall debt burden to

leading standards and promote openness

stabilise next year.

between the UK and international markets". The Bill introduces provisions for: a new prudential regime post-Brexit; debt respite schemes; help-to-save

HM Treasury Consultation: Future Regulatory Framework Review

accounts; further rules around insider dealing and money laundering; continued access to financial services markets; changes to benchmarking and the orderly transition away from LIBOR; and numerous other subjects, including amendments to PRIIPs and OTC derivatives.

This paper, open until 19 January 2021, seeks to establish "an overall blueprint for financial services regulation, focusing on the split of responsibilities between Parliament, the government and the financial services regulators". Looking to

build on the strengths of the original EU Capital Markets Recovery Package

FSMA model, new legislation will introduce both an "activity-specific policy framework" setting the overall purpose, approach and key policy considerations

On 22 October the EU Member States agreed the Council's position on the Capital Markets Recovery Package, presented by the Commission in July. The package contains targeted amendments to the EU capital market rules to help companies raise capital on public markets, support the lending capacity of banks and boost investment in the real economy. The amendments focus on the MiFID II, the Prospectus Regulation and the securitisation framework laid down in the Securitisation Regulation and the Capital Requirements Regulation.

The Commission has proposed a number of amendments to reduce the level of

relevant for particular areas of the regulatory universe, plus enhanced transparency arrangements requiring regulators to explain how their proposals meet the statutory purpose set for a particular regulatory regime.

The paper also contains proposals for changes to the accountability, scrutiny and engagement arrangements that support the relationships between Parliament, HM Treasury, the regulators, regulated firms and other stakeholders. Using the feedback received to this paper, the government will publish a second consultation in H1 2021, setting out more detail on the proposed approach.

information that will have to be provided to professional investors such as institutional

PIMFA In the Press

investors and banks, and, in some limited cases, to retail investors. The German Presidency will start negotiations with the

•

International Adviser: UK

European Parliament as soon as the

Financial Services Bill enters

Parliament has adopted its position.

parliament •

New Model Adviser: Rising PI premiums ‘existential threat’ to

Latest PIMFA Consultation Responses

IFAs •

Law360: Financial Advisers Fear Insurance Poses 'Existential

PIMFA’s latest consultation response is HM Treasury’s consultation on the

Threat' •

Professional Adviser: More than 80% of advice firms not confident

Economic Crime Levy.

they will secure affordable PII in

Read this and all of our other PIMFA

the future - PIMFA

consultation papers here.

•

Financial Adviser/FT Adviser: Pimfa warns of 'existential' threat to advisers from rising PI

•

FT Adviser: Succession-proof your firm by planning with clients

Brexit and PIMFA Members' Preparedness

The UK is due to exit the EU Single Market when the Brexit transition period ends on 31 December 2020. The negotiations on the terms of the future relationship between the UK and EU are ongoing but regardless of the outcome of the talks, firms with an EU footprint will need to adjust to operating from a third country in relation to the EU and decide how to access and operate on behalf of clients living in the EU. Retail financial services firms cannot rely on a pan-European set of rules for servicing customers in the EU and, with passporting lost and no equivalence available in the retail investment sector, the options for PIMFA firms to continue cross-border trade with the EU are limited and mostly dependent on the approaches adopted by national regulators in the EU Member States.

The rules that Member States will apply to cross- border trade post Brexit are mostly third country rules, not specific Brexit rules.

The FCA advises firms in the retail financial services sector who wish to continue to serve clients in the EU to speak to local regulators and ensure they understand the national regulator’s approach and the impact it will have on their business post Brexit transition.

Legal Advice?

We would like to hear from firms if they would like to obtain legal advice from a law firm on options available to them for servicing clients in the EU once the UK has left after the Brexit transition period on 31 December 2020. The cost of such advice would be shared among firms participating in the project. At this stage we would be grateful if you could indicate your interest to us by emailing Maja Erceg.

Latest PIMFA Blogs & Press Releases

•

PIMFA welcomes first reading of Financial Services Bill

•

Rising Professional Indemnity Insurance premiums present advice industry with an existential threat

•

PIMFA urges Regulator to work more closely with industry to rebuild levels of trust in fair FSCS outcomes

•

PIMFA welcomes FCA analysis of regulatory perimeter but calls for swifter action to protect consumers

•

Mitigo joins as latest PIMFA Plus partner to help members combat alarming new trend in ransomware attacks

•

Scams and FSCS issues are symptomatic of supervisory failings says PIMFA at Select Committee inquiry

•

PIMFA welcomes FCA call for evidence on how to improve the consumer investment market

•

Blog: ESG and Covid 19

EVENTS & LEARNING

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Break through the barriers and get what you want from your career. This six month programme is for any woman seeking to reach her true leadership potential and for anyone — man or woman — looking to create a more

gender-balanced workforce. Find out more about this ground breaking programme here.

PIMFA Online Event The Financial Adviser Virtual Forum 25 November - FREE TO MEMBERS The Virtual Forum will be an opportunity for IFA professionals to hear from industry experts and the PIMFA policy team on a variety of topics such as: •

Pension Transfer

•

What to Look out for in 2021

•

Regulatory Updates

•

The Opportunities of ESG

•

And more…

The Forum will also enable attendees to earn CPD hours and to connect with fellow colleagues. This event is free for PIMFA IFA members.

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

PIMFA Online Conference Virtual Fest V2 27- 28 January 2021 Following on from the HUGE success of the inaugural PIMFA Virtual Fest in June 2020, we are proud to announce that bookings are now open for Virtual Fest V2. Taking place over two days (27 & 28 January 2021) the event will deliver presentations on key areas

which members have identified as their key short- and long-term focus including: • Compliance • Risk and Resilience • ESG and Impact Investing • Cyber Resilience • and others A 50% early-bird discount is available to all PIMFA members if you book by October 31st For more info and to book your place please click here

The PIMFA ESG Academy, supported by Morningstar, is definitely NOT your traditional online class! As you learn at your own pace and in your own time, you will have access to an evergreen library of ESG content that you can engage and interact with on your tablet, computer and mobile – all FREE for PIMFA members!

The Academy was launched following growing demands by advisers for an immersive, engaging, CPD-approved learning experience that supports them in making the most of the growing ESG opportunity - find out more here.

WHAT'S HAPPENING IN OUR INDUSTRY

FCA Explains: Implementing the Certification Regime and Conduct Rules

As you will be aware, the Senior Manager and Certification Regime (SM&CR) applies to almost every UK solo-regulated firm, from very small firms (including sole traders and limited permission consumer credit firms) to some of the largest global firms.

The FCA want to ensure firms are getting all the help they need with implementation and have released their latest FCA Explainer video, Implementing the Certification Regime and Conduct Rules, to further aid this process.

The video gives a short overview on what firms need to do to implement the Certification Regime and the Conduct Rules ahead of the deadline on 31 March 2021.

EU AIFMD Review

The European Commission has opened a consultation on the Alternative Investment Fund Managers Directive (AIFMD). The consultation aims to gather views from the AIFMs, AIF distributors, industry representatives, investors and investor protection associations, financial markets authorities and citizens on potential changes to the AIFMD. In view of the European Commission’s continuous efforts to forge Capital Markets Union (CMU), the consultation seeks views on how to achieve a more efficiently functioning EU AIF market as a part of a stable financial system. The Commission will be looking again at the issue of outsourcing of investment decisions and other services to companies outside the EU as many EU-based funds rely on the UK portfolio management services.

The consultation raises questions about it, including whether the rules are clear enough to prevent creation of letter-box entities in the EU, whether rules are enforced across the EU and appropriate to ensure effective risk management, and whether similar rules should apply to retail funds known as UCITS. ESMA’s powers are also included in the

consultation, including whether to give ESMA powers to authorize and supervise all alternative funds. The Commission also asks whether NCAs need clearer powers to suspend funds when they pose a risk to the financial system, and whether all rules for alternative and retail funds should be merged into a single rulebook. The consultation closes on January 29 2021.

UK – US Clearing Supervision Agreement

The UK and the US signed clearing supervision agreement on 20 October. The Bank of England and the US Commodity Futures Trading Commission agreed to jointly supervise their clearing industries. CFTC Chairman Heath Tarbert called the Memorandum of Understanding Concerning Cooperation and Exchange of Information Related to the Supervision of Cross Border Clearing Organisation, a “historic agreement” and said his hope was other nations would follow suit so that there can be a workable system in place where there is mutual comity, respect, and nations are focused on the things that matter most to them, instead of having a series of contradictory, overlapping, duplicative rules.

The remarks are a reminder of the UK’s position in the Brexit context and the EU’s insistence on oversight of euro clearing at London Stock Exchange’s LCH and the intention to capture the business within the EU.

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Contact Us

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