PIMFA Weekly News Bulletin - 28 June 2021

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PIMFA WEEKLY NEWS BULLETIN | 28 June 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.

UK launches negotiations with £9 trillion Pacific free trade area

On 22 June the UK launched negotiations with 11 countries belonging to a £9 trillion free trade area in a landmark moment for the UK as an independent trading nation. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is home to 500 million people and includes some of the world’s biggest current and future economies across Asia-Pacific and the Americas. Joining would give our exporters and services firms better access to these dynamic markets, with almost two-thirds of the world’s middle classes expected to be in Asia by 2030.

A deal would open new markets for our services industries, lower tariffs on goods, and create new opportunities for UK farmers. UK exports to these countries are set to increase by £37 billion, a 65% rise, by 2030. CPTTP is particularly advanced in both digital and services trade, which plays to Britain’s strengths as the world’s second-largest services exporter. An agreement would make it simpler for the UK to sell services digitally and cheaper and easier for tech firms to expand abroad. Joining CPTPP would also open new

financial and professional services markets for British firms, making it easier for highly skilled Brits to live and work in member countries.

PIMFA Asset Allocation Survey OPEN

The Q3 2021 PIMFA Asset Allocation Survey is now open for submissions of your firms model portfolios.

Complete the survey in as little as 1 minute, receive your firms complimentary Compare My Allocations report and see how your firm's portfolios compare to others across asset classes, investment strategies and risk categories.

Please contact indices@pimfa.co.uk for more information.

A Roadmap for Economic Recovery

In their new report ‘A Roadmap for Economic Recovery', TheCityUK sets out how the financial and related professional services industry, as a strategic national asset, can play an important role in driving change and supporting economic recovery. Covid-19 has had a huge impact on the UK and the rest of the world, unleashing an unprecedented public health emergency and economic crisis which will shape the global economy for decades to come.

While the direct impact of the pandemic has been far reaching, it has also accelerated or accentuated other trends that were already in train, such as the international slide towards protectionism and isolationism; the changing relationship between the UK and its largest single market; regional disparities of wealth, investment and opportunity; a drive for greater diversity, inclusion and equality in business and society; an urgency to address climate change and rapid technological transformation.

The report makes a range of recommendations – many that the industry can take forward itself, but others that require it to collaborate with government and regulators. These range from using its unique global position to make the case for open markets, to placing digital

trade in services at the heart of future Free Trade Agreements and empowering local leaders to build and promote our many thriving industry hubs across the country.

U.S.- UK Financial Innovation Partnership (FIP)

U.S. and UK participants in the U.S.- UK Financial Innovation Partnership (FIP) met virtually on June 23 and June 24, 2021 for a regulatory and commercial pillar meeting, exchanging views on topics of mutual interest in the U.S. and UK FinTech ecosystems and deepening ties between U.S. and UK financial authorities. Participants exchanged views on the regulatory approaches to cryptoassets and stablecoins, digital payments developments, and regulatory and supervisory technology such as Digital ID.

Both sides provided updates on their approaches to central bank digital currencies, including the Bank of England’s recent publication titled “New forms of digital money,” and discussed the ongoing work at the G7 on the topic. In addition, the UK and U.S. discussed the testing of innovative financial services including, for the UK, the Financial Conduct Authority’s TechSprint, Sandbox, and Green Fintech Challenge initiatives, and for the U.S., the priorities of the Securities Exchange Commissions’ FinHub and the Office of the Comptroller of the Currency’s Office of Innovation.

Participants intend to continue to engage on these topics, as well as other financial innovation topics of mutual interest, in support of the next U.S.- UK Financial Regulatory Working Group meeting, due to be held in the fall of this year.

Latest PIMFA Press Releases

PIMFA welcomes Treasury Select Committee report recommending change in culture at Financial Conduct Authority

Latest PIMFA Press Coverage

Financial Times: Wealth managers need to hear diversity’s call

Rosie Reynolds Marketing joins as the latest PIMFA Plus Partner to help firms develop their digital futures

Which? Putting a price on financial advice

PIMFA voices disappointment at fee approach

Committee LCF inquiry urges more

International Investment: Treasury

'interventionist' FCA

for Appointed Representatives PIMFA launches their first industry awards to recognise companies promoting diversity and inclusion PIMFA welcomes FCA plans to stop Claims Management Companies from ‘Phoenixing’

FT Adviser: PIMFA supports call for culture change at FCA

Proactive Investor: FCA needs big changes to prevent repeat of LCF affair, says Treasury Committee

Financial Reporter: MPs question whether FCA met its own regulatory standards during LCF scandal

Visions for a Net Zero Future

A ground-breaking new international collaboration between academics, business, civil society and citizens was unveiled on 18 June 2021 by the UK COP26 Presidency, aimed at helping all nations of the world envision what a climate-resilient, net zero future would look like for them. The ‘Visions for a Net Zero Future’ looks at the innovations and approaches that could deliver a greener, carbon-neutral society.

The project will develop six visions, each focusing on a different region around the world the UK, Jamaica, Brazil, Kenya, United Arab Emirates and Saudi Arabia, and India. It will demonstrate the advantages of making the transition to net zero, including for health, economic growth, and security, and look to create benefits including cleaner air, cheaper energy sources, green jobs, protected biodiversity, and safer communities.

The visions and research findings of the project are set to be published in September 2021, acting as world-class evidence-based insights that will support a solutions-focussed COP26 in which science, innovation and evidence are at the forefront.

EVENTS & LEARNING

Diversity & Inclusion Awards Entries Close: 17 August | Event Date: 20 October 8 Categories 15 Judges 7 weeks remaining to submit your entry FREE to Enter We believe that there are pockets of great D&I practice that remain hidden or unrecognised and the PIMFA D&I Awards 2021 are an opportunity for these firms and individuals to be recognised for the wonderful work being carried out.

Entry to the PIMFA D&I Awards is free and open to all firms and stakeholders in the wealth management, investment services and financial advice sector - members and non-members alike.

We are encouraging all organisations - large or small - at whatever point they are on with their D&I Journey to enter. Whether you are just starting out and looking for inspiration and ideas or are further along and can share experiences and insight, we want to hear from you about the work you are doing - all 8 of the categories are available to enter here.

Find out more and start your entry

View upcoming PIMFA Events and Learning here.

PARTNER EVENTS

Morningstar Investment Conference Digital Event: 29 - 30 June 2021

This conference is FREE for advisers, wealth managers and paraplanners to attend.

The agenda continues to grow! As well as sessions on ESG and how it can be implemented into the Adviser practice; Greenwashing (presented by Hortense Bioy, Director, Sustainability Research, Global Manager Research at Morningstar, a session from foreign affairs broadcaster Tim Marshall on Geopolitics and Jim Leaviss, Head of Public Fixed Income and Fund Manager of the M&G Global Macro Bond Fund who will be discussing the importance of a flexible approach when it comes to Fixed Income Investing.

More speakers will be joining and you can rest assured that we will include research, insights, and analysis from our Morningstar subject matter experts that can help us all explore new horizons for empowering investor success.

All content from the conference will be available on demand until 30 July.

Find out more and register here.

Bank Rate maintained at 0.1% - June 2021

At a meeting on 22 June 2021, the Bank of England’s Monetary Policy Committee (MPC) voted unanimously to maintain the UK Bank Rate at 0.1%. They also voted unanimously for the Bank of England to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £20

billion. They also voted, by a majority of 8-1, for the Bank of England to continue with its existing programme of UK government bond purchases, financed by the issuance of central bank reserves, maintaining the target for the stock of these government bond purchases at £875 billion, and so the total target stock of asset purchases at £895 billion.

In the MPC’s central projection in the May Monetary Policy Report, UK GDP was expected to recover strongly over 2021, to pre-Covid-19 levels. Spare capacity in the economy was expected to be eliminated as activity picked up, and there was expected to be a temporary period of excess demand, before demand and supply returned broadly to balance. CPI inflation was projected to rise temporarily above the 2% target, owing mainly to developments in energy prices. As these transitory effects fade, conditioned on the market path for interest rates, inflation was expected to return to around 2% in the medium term.

FCA consults on further climate-related disclosure rules

The FCA has published new proposals on climate-related disclosure rules for asset managers, life insurers, and FCA-regulated pension providers consistent with the TCFD’s recommendations. The proposals aim to increase transparency and enable clients and consumers to make considered choices, while remaining proportionate for firms. Given the global reach of firms operating in the UK, the FCA has approached the design of the regime with international consistency in mind. For this reason, the proposals reference the TCFD’s recommendations, which are now widely accepted internationally.

The FCA intends to reduce potential harm, such as clients engaging firms that do not adequately manage climate-related risks and opportunities, and consumers buying unsuitable products. The key elements of the proposals are: Entity-level disclosures - firms would be required to publish, annually, an entity-level TCFD report on how they take climate-related risks and opportunities into account in managing or administering investments on behalf of clients and consumers; Product or portfolio-level disclosures - firms would be required to produce, annually, a baseline set of consistent, comparable disclosures in respect of their products and portfolios, including a core set of metrics.

The FCA is seeking to achieve three outcomes: better outcomes for clients and consumers; deeper consideration of climate-related risks and opportunities by in-scope

firms and coordinated information flow along the investment chain. The FCA is asking for comments by 10 September 2021.

PIMFA intends to respond to the consultation. If you would like to contribute to the response and attend the PIMFA Sustainable Finance Working Group, please contact MajaE@pimfa.co.uk

PIMFA's Consultation Responses

PIMFA’s latest Consultation Response is to the FCA's CP21/7 on a new UK Prudential regime for MIFID investment firms.

Read this and all other PIMFA consultation papers here.

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