PIMFA Weekly News Bulletin - 29 November 2021

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PIMFA WEEKLY NEWS BULLETIN | 29 November 2021 Dear Nigel,

Welcome to the PIMFA Bulletin; grab a coffee and take 10 minutes to read the latest news impacting you and your firm.

PIMFA MSCI Index Series – New asset allocations effective from 01.12.2021

The PIMFA Indices Committee have made changes to the portfolio weights of the MSCI PIMFA Index Series’. Changes below will be effective from Wednesday 1st December.

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MSCI PIMFA Private Investor Index Series

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MSCI PIMFA Equity Risk Index Series

For further details please contact us at indices@pimfa.co.uk

What is the Impact of Fraud in Wealth Management?

In partnership with LexisNexis Risk Solutions, we are inviting members to participate in the latest PIMFA Fraud Trends survey.

The survey is completely anonymous, takes no more than two minutes to complete and your insight and expertise is gladly welcomed. The more feedback we receive, the better we can understand the latest picture of fraud in our industry right now.

The results will be shared once the responses have been collated. PIMFA will be able to use the results to better advise and assist our members.

Click here to complete the survey, or if you have any queries, please contact Giulia Lupato by clicking here.

Latest PIMFA Press Releases

FCA pledges to work with PIMFA & the industry to stabilise, and eventually reduce, the FSCS levy at PIMFA’s Leadership Summit

Latest PIMFA Press Coverage

FT Adviser: The direction of travel for FSCS levies is not one that brings confidence

PIMFA welcomes lower Financial Services Compensation Scheme levy forecast PIMFA delighted to welcome Geoff Towers to board as non-executive director PIMFA delighted to announce winners in first Diversity & Inclusion Awards FCA must focus attention on transformation programme following departure of Chair Charles Randell

Investment Week: FCA joins forces with PIMFA to ease FSCS levy 'burden' on firms

Yorkshire Post: New health campaign aims to fight work-related stress FT Adviser: Clarity needed on FCA’s consumer duty proposals Citywire Wealth Manager: FCA promises to bring down ballooning FSCS levy

PIMFA's Latest Consultation Responses

PIMFA’s latest Consultation Response is to the FCA CP 21/28 on the New Cancellation and Variation Power; Changes to the Handbook and Enforcement Guide.

Read this and all other PIMFA consultation papers here.

PIMFA Events & Learning

View upcoming PIMFA Events and Learning here.

FCA Reforms its Decision-Making Process

The FCA has reformed its decision-making process to 'ensure it can make faster and more effective decisions for consumers, markets and firms'. As part of its transformation to a more innovative and assertive regulator, more decisions will be taken by the FCA’s senior managers rather than by the Regulatory Decisions Committee (RDC). The new process will ensure decisions to prevent or stop consumer harm are taken more quickly.

More contentious cases will continue to be reviewed by the RDC, which is a committee of the FCA’s Board that operates separately from the regulator. Its members are drawn from business, consumer and financial services backgrounds.

HM Treasury Report on AML/CTF Supervision

HM Treasury has published a report on the performance of Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CTF) supervisors between April 2019-April 2020. The report concludes that actions taken by supervisors have remained broadly consistent with the previous reporting period whilst also noting that there is still more work to do to achieve greater consistency in approach to supervision and enforcement.

You can read the report in full here.

ONS: The Impacts of EU Exit and Coronavirus on UK trade in Services

In November the Office for National Statistics (ONS) published an analysis of the impacts of EU exit and coronavirus (COVID-19) on UK trade in services.

In Quarter 2 (April to June) 2021, service exports and imports both increased from the previous quarter (2.1% and 3.8% respectively); trade with the EU increased by more than non-EU trade. Trade in financial services declined for both exports and imports by £1.5 billion (negative 9.7%) and £0.3 billion (negative 6.3%) respectively compared with Quarter 2 2019. Non-EU exports increased £0.5 billion (5.1%) and imports £0.01 billion (0.4%) since Quarter 2 2019, whereas EU exports and imports declined £2.0 billion (negative 30.6%) and £0.3 billion (negative 21.3%) respectively.

This fall in financial services trade with the EU is partly because of EU exit-related rule changes, with the UK-EU Trade and Co-operation Agreement (TCA) containing limited provision for access in financial services. While financial services have been relatively stable, the ongoing impact of the TCA is evident in Quarter 2 2021. The fall in financial services trade with the EU is being driven by exports of explicitly charged and other financial services, where the large EU partner countries of France, Ireland, Germany and the Netherlands have seen declines in value in Quarter 2 2021 on both a pre-coronavirus Quarter 2 2019 and Quarter 1 2021 basis.

The ONS says this is in line with reports of some financial service provisions, such as share and derivatives trading, moving from the UK to the EU, or via intermediate countries with access to EU markets such as the United States, following the end of the EU exit transition period in 2021.

AIFMD Review and the Delegations Issue

As part of its Capital Markets Union (CMU) package, the European Commission has published a directive amending the AIFMD (the Alternative Investment Fund Managers Directive). The proposed changes are limited in scope and focus on delegation, loan origination, liquidity risk management, data reporting and depositaries.

With regards to the delegation issue, the Commission says that the review clarifies the rules on delegation and ensures that there is adequate information and coordination among EU supervisors, better protecting investors and financial stability. The Commission has proposed that competent authorities would be required to determine whether the Alternative Investment Fund Managers (AIFM) will delegate more portfolio management or risk management functions to non-EU entities than it retains in the EU and notify ESMA of such delegations annually. ESMA would report to the Commission every two years, analysing market practices regarding delegation to entities located in third countries to prevent ‘letter-box’ entities in the EU.

The proposals state that the persons who effectively conducts the business of the AIFM are of sufficiently good repute and are sufficiently experienced and there should be at least two natural persons who are either employed full-time by the AIFM or who are committed full-time to conduct the business of that AIFM and who are resident in the Union. This is aimed at addressing inconsistencies in how different member states approach the delegation issue and indicates that the European Securities and Markets Authority (ESMA) will continue to look at this brief. The changes to delegation, liquidity risk management, data reporting and regulatory treatment of custodians will also be applied to the UCITS Directive.

Capital Markets Union: Commission Proposes New Measures to Boost EU Capital Markets

On 25 November 2021 the European Commission adopted a package of measures to improve the ability of companies to raise capital across the EU and ensure that Europeans get the best deals for their savings and investments.

The proposals are aimed at ensuring that investors have better access to company and trading data, they encourage long-term investment and make it easier and safer for investment funds to be sold cross-border. The proposals will also better connect EU companies with investors, improving companies' access to funding, broadening investment opportunities for retail investors, and further integrating EU capital markets.

The legislative proposals adopted are: •

The European Single Access Point (ESAP) - offering a single access point for public financial and sustainability-related information about EU companies and investment products;

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Review of the European Long-Term Investment Funds (ELTIFs) Regulation encouraging long-term investment, including by retail investors;

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Review of the Alternative Investment Fund Managers Directive (AIFMD) - enhancing the efficiency and integration of the Alternative Investment Funds market;

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Review of the Markets in Financial Instruments Regulation (MiFIR) - enhancing transparency by introducing a “European consolidated tape” for easier access to trading data by all investors

The Commission will follow up in 2022 with more Capital Markets Union (CMU) actions, including a proposal on listing, an open finance framework, an initiative on corporate insolvency and a financial literacy framework. All elements of the legislative package will be discussed by the European Parliament and the Council.

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