PIMFA Weekly News Bulletin - 28 March 2022

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PIMFA WEEKLY NEWS BULLETIN | 28 March 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.

Russian invasion of Ukraine: Latest Updates

Russian invasion of Ukraine: operational and cyber resilience - update The FCA has set out points that firms should consider regarding their operational and cyber resilience following Russia’s invasion of Ukraine.

Although the National Cyber Security Centre (NCSC) is not aware of any current specific cyber threats to the UK following events in Ukraine, they have supported US President Biden’s call for increased cyber security vigilance among firms in response to Russia’s invasion of Ukraine. The FCA recommends firms follow their actionable guidance as a priority, to reduce your risk of cyber compromise.

Alongside the guidance listed above, the NCSC have issued guidance for various sizes of firms: large firms, small and medium sized firms, microbusinesses and sole traders. Firms are also encouraged to review the NCSC’s Cyber Essentials scheme. Firms should consider their ability, and that of their third-party providers, to withstand a cyber attack and should take all appropriate steps to shore up controls, including raising staff awareness.

The full update can be found here.

Treasury Committee publishes report on ‘Defeating Putin: The development, implementation and impact of economic sanctions on Russia’ The Treasury Committee warns Russia that it is heading towards economic catastrophe, but that its invasion of Ukraine will have a significant economic impact on the cost of living in the UK.

The cross-party Committee of MPs deplores the illegal and unprovoked invasion of Ukraine and supports the imposition of severe economic sanctions against Russia but cautions that the UK is likely to feel economic consequences and calls on the Government to provide additional financial assistance for those on the lowest incomes.

In the report, the Committee warns that the UK is not protected from the economic consequences of sanctions on oil and gas, and that further sanctions will lead to higher prices, with knock-on effects for households and businesses. The Committee also calls for guidance issued to businesses involved in implementing sanctions to be clearer, and resource for the Office of Financial Sanctions Implementation to be boosted.

The report also considers the effectiveness of current measures, the scope for further action and the enforcement regime required to enact sanctions. The impact of the Government’s action on the UK economy, Russia and the wider world is also considered, as is the role of the financial services industry in implementing sanctions.

Notice to all FCA regulated firms with exposure to cryptoassets In a statement published on 24 March, the FCA has reminded all regulated firms of their existing obligations when they are interacting with or exposed to cryptoassets and related services.

While cryptoassets and their underlying technologies can offer benefits to financial services firms e.g., reduce costs and increase efficiencies, they also present risks to market integrity and consumers, particularly when used as a speculative investment. This is additional to significant risks in relation to financial crime and money laundering.

The FCA have set out some areas of risk that firms need to consider. This is not a complete list and firms should consider any further controls and requirements which apply

to them. They should read this statement together with the latest guidance on how firms should manage financial crime risks associated with cryptoassets in the ongoing Russia/Ukraine conflict.

The FCA also recommends that firms read the Letter from Sam Woods on existing or planned exposure to cryptoassets, published on 25 March by the Prudential Regulation Authority (PRA), as well as the publications from the Bank of England and the Financial Policy Committee (FPC), which focus on cryptoassets and new forms of digital money.

HM Treasury updates advisory notice on AM/TF controls in high-risk third countries On the 17th March, HMT published an up-dated advisory notice about risks posed by jurisdictions with unsatisfactory money laundering and terrorist financing controls. This will substitute the list of high-risk third countries specified in Schedule 3ZA of the MLRs with a new list. This list will continue to mirror both the Financial Action Task Force’s (FATF) ‘Jurisdictions under increased monitoring’ and ‘High-risk jurisdictions subject to a call for action’ documents.

You can read the notice in full here.

New financial sanctions measures in relation to Russia Following the Prime Minister’s statement to the House of Commons on 22 February 2022, the UK announced a tranche of sanctions on Russia. The Prime Minister announced further measures on 24 February 2022 which are available on the Foreign, Commonwealth & Development Office website. On 24 March 2022 measures have also been taken against Belarus.

If you require a licence to permit any activity which would otherwise be prohibited by sanctions regulations, you must contact the relevant department.

The full statement can be found here.

PIMFA Private Investor Indices Survey

The next Private Investor Indices Survey submissions opens at 9am on 11th April and closes at 5pm on 27th April.

Please visit our website to complete the survey.

PIMFA's Latest Consultation Responses

Our latest Consultation Responses include: •

PIMFA's response the FCA Compensation Framework Review

•

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

•

PIMFA response to A New Consumer Duty – Feedback to CP21/3 and further consultation

Read these and all other PIMFA consultation papers here.

Latest PIMFA Press Releases

Latest PIMFA Press Coverage

National Audit Office report sets out how

Daily Telegraph: Is Bitcoin a good

British Steel Pension members were failed

investment in 2022?

in stark detail FT Adviser: Pensions freedoms and BSPS FCA sets out aims to increase consumer

created 'financial feeding frenzy'

confidence in investment market at PIMFA’s Virtual Fest 2022

Professional Adviser: FOS compensation limit increase to £375,000 on 1 April

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

International Adviser: UK parliament

Government

unveils inquiry into British Steel pension scandal

PIMFA’s Virtual Fest adds Shadow Economic Secretary to the Treasury Tulip

Raconteur: Climate change risks and the

speaker Siddiq as second keynote

future of insurance

PIMFA delighted by Government

Actuarial Post: How British Steel

paid-for announcement that it will include

Pensioners were failed in stark detail

Online online adverts within scope of Safety Bill to tackle fraud

FT Adviser Podcast: Online safety bill a chance for tech firms to ‘clean up image’

PIMFA Events

PIMFA is once again taking the show on the road and the team, along with partners Shoosmiths and Mitigo Cyber Security, will be meeting members and others in Manchester and Birmingham on March 29 and 30 March.

These PIMFA Regional events will offer attendees the opportunity to listen to experts on topics including: •

Consumer Duty

•

Cyber Resilience

•

And a comprehensive regulatory update

At each event there will be networking opportunities to converse with industry colleagues.

Attendees will receive 3 hours of CPD for full attendance.

29 MARCH | MANCHESTER | 10:30 – 15:30 Click here to register

30 MARCH | BIRMINGHAM | 10:30 – 15:30 Click here to register

Book Now

PIMFA Learning

PIMFA WEBINAR: EMERGING THEMES: REGULATORY GUIDANCE FOR WEALTH MANAGERS IN 2022 5 April | 11:00 - 12:00 | FREE TO ATTEND In 2022, Wealth Management firms face a daunting schedule of regulatory changes. ESG, Operational Resilience and Consumer Duty are just a few critical areas amongst many others that are competing for your time, limited budgets and finite resources.

In this FREE 60-minute webinar, Worksmart’s Director of Regulation & Market Engagement Julie Pardy and Shoosmith’s Partner in the Dispute Resolution and Litigation team, Daren Allen, make sense of what Risk and Compliance professionals need to know to steer their firms clear of the dangers posed by an increasingly challenging and complex regulatory landscape.

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.

FCA PS22/2: Amendments to PRIIPs requirements

With only minimal changes, PS22/2 confirms the rule proposals set out in CP21/23.

Responding to industry calls for a more fundamental review of the PRIIPs regime, the FCA makes clear that “these amendments are targeted amendments only” and that “this is the first step towards HMT’s commitment to ‘conduct a more wholesale review of the disclosure regime for UK retail investors’, which would include a more holistic review of the PRIIPs regime”.

Coming into force on 25 March 2022, with a transitional period extending to 31 December 2022, PS22/2 amends FCA Handbook requirements and the on-shored PRIIPs RTS to: •

specify the criteria that determine whether or not a corporate bond is a PRIIP;

•

clarify what it means for a PRIIP to be “made available” to retail clients, so as to rule out

of scope products specifically designed for/issued to non-retail investors; •

replace the requirement for PRIIP manufacturers to display performance scenarios in

the KID with a requirement for a narrative description of the factors likely to affect future performance;

•

introduce a requirement for manufacturers to upgrade a product’s Summary Risk

Indicator (SRI) if they believe that the score resulting from the RTS methodology underestimates the level of risk and may therefore be misleading for investors; •

requires manufacturers to assign a SRI no lower than 6 or 7 for a PRIIP issued by a

VCT; •

increase the KID character limit for the narrative explanation of a product’s SRI from

200 to 400; •

modify the application of the slippage methodology used to calculate transaction costs

where funds apply anti-dilution mechanisms and for transactions in OTC bonds and indextracking funds.

PS22/2 can be found here.

The U.S./UK Dialogues on the Future of Atlantic Trade

On March 21 and 22, UK Secretary of State for International Trade Anne-Marie Trevelyan and US Trade Representative Ambassador Katherine Tai hosted the first joint U.S./UK Dialogues on the Future of Atlantic Trade in Baltimore.

Following President Biden and Prime Minister Boris Johnson’s announcement last year of a new ‘Atlantic Charter’, the U.S./UK Dialogues on the Future of Atlantic Trade are exploring how the United States and United Kingdom will collaborate to advance mutual international trade priorities rooted in our shared values, while promoting innovation and inclusive economic growth for workers and businesses on both sides of the Atlantic.

The stakeholder roundtables identified areas of consensus where the UK and U.S. can build and deepen their cooperation on trade. This includes protecting labour rights and the environment; promoting supply chain resilience; supporting the low-carbon transition; making it easier for SMEs to export, and ensuring the benefits of trade are evenly distributed across both countries.

UK launches negotiations with Canada on a new, modernised trade deal

The UK and Canada launched negotiations on a new Free Trade Agreement (FTA) in Ottawa which aims to bring benefits for both countries and strengthen a trading relationship already worth over £19 billion in 2020.

Building on the benefits of the UK-Canada Trade Continuity Agreement, the new FTA will go further than ever before in areas like innovation, digital, data, the environment and women’s economic empowerment. The UK is Canada’s third largest trading partner and Canadian demand for imports is projected to grow by 45% by 2035. A new UK-Canada FTA could bring benefits including boosting the UK’s world-renowned services sector by making it easier for services providers to trade in Canada, benefiting areas such as research and development, legal services, and finance. The UK is the second-largest exporter of services in the world, with services accounting for almost half (48%) of UK exports to Canada in 2020.

A new trade deal with Canada would also aim to enhance cooperation on tackling climate change by promoting green trade and supporting commitments including those in the Paris Agreement. Negotiating a new agreement with Canada is a part of the plan to build new trade routes for the UK’s services and digital economies and to refocus British trade on the faster-growing parts of the world.

EU regulation - ESAs issue updated supervisory statement on the application of the SFDR

On 25 March, the three European Supervisory Authorities (ESAs) i.e. EBA, EIOPA and ESMA, updated their joint supervisory statement on the application of the Sustainable Finance Disclosure Regulation (SFDR).

This includes a new timeline, expectations about the explicit quantification of the product disclosures under Article 5 and 6 of the Taxonomy Regulation, and the use of estimates.

The supervisory statement aims to promote an effective and consistent application and national supervision of the SFDR, thus creating a level playing field and protecting investors.

The ESAs recommend that national competent authorities and market participants use the current interim period from 10 March 2021 until 1 January 2023 to prepare for the application of the forthcoming Commission Delegated Regulation containing the

Regulatory Technical Standards (RTS) while also applying the relevant measures of SFDR and the Taxonomy Regulation according to the relevant application dates outlined in the supervisory statement.

The ESAs clarify that, under Article 5 and 6 of the Taxonomy Regulation, the supervisory expectation for disclosures during the interim period is that financial market participants should provide an explicit quantification, through the numerical disclosure of the percentage, of the extent to which investments underlying the financial product are taxonomy-aligned. In addition, while estimates should not be used, where information is not readily available from investee companies’ public disclosures, financial market participants may rely on equivalent information on taxonomy-alignment obtained directly from investee companies or from third party providers.

This updated statement replaces the initial joint supervisory statement, which was released in February 2021.

The Global Financial Centres Index 31

The thirty-first edition of the Global Financial Centres Index (GFCI 31), produced by Z/Yen Partners in London and China Development Institute (CDI) in Shenzhen, was published on 24 March 2022.

GFCI 31 provides evaluations of future competitiveness and rankings for 119 financial centres around the world. 126 financial centres were researched for GFCI 31 of which 119 are now in the main index. New York leads the index, with London second, ahead of Hong Kong and Shanghai. Shenzhen returned to the top ten in the index, replacing Paris, which fell to 11th place.

London continues to lead in the region, but dropped 14 points in the ratings, the biggest drop in the ratings among the top 20 centres. Other leading Western European centres were generally stable, although Berlin and Glasgow improved more than 10 rank places, while Hamburg, Stuttgart, Jersey, and Liechtenstein fell 10 or more ranking places.

In the assessment of FinTech offerings, New York and Shanghai retained their leading

positions at first and second place. Beijing and San Francisco overtook London to take third and fourth place.

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Bulletin is just one of the many insights and publications PIMFA produces on the latest industry news and issues - most of which are accessible to PIMFA members only.

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