PIMFA Weekly News Bulletin - 5 July 2021

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PIMFA WEEKLY NEWS BULLETIN | 5 July 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.

PIMFA and CISI School Leavers Program

PIMFA are collaborating with the CISI to develop and implement a school leaver program to help increase gender and ethnic diversity within financial planning, financial and investment advice roles in the financial planning and wealth management profession. This program provides access to firms from a broader base of students, something which we know many of you are considering as part of your recruitment plans and drive to increase diversity of new intake to your firms.

Many of you already actively promote the career pathways in schools and as you know, PIMFA worked with a pilot of firms and The Brokerage this last year to do just that. This collaboration will go one step further and facilitate entry-level job roles for school leavers with a training pathway.

Please register the interest of your firm in participating in the program and offering one to two students a two year paid job placement, which is integral to the program’s success.

How will it work?

Read more about the program and register your interest here.

Mansion House Speech 2021 – Rishi Sunak

From reforming capital markets and seeking closer links with advanced and emerging financial centres, through to boosting opportunities for green investment and protecting access to cash, Rishi Sunak, Chancellor of the Exchequer, outlined how the UK’s financial services industry can help the country to lead on the global stage while also acting in the interests of people at home.

In his first address at Mansion House to an audience of young and aspiring leaders in financial services, the Chancellor outlined the wide set of reforms already underway in the UK. He also published a new ‘roadmap’, detailing both the progress being made, and how the government is going further to ensure the sector remains competitive now it has left the EU. The Chancellor said the UK will follow five principles: openness, a rules-based international order, high quality regulation, a sovereign approach and multilateral engagement. The UK will pursue real change, the Chancellor said, adding that “engagement alone isn’t enough; our international actions must make a tangible difference to people’s lives.”

The Chancellor also said the UK’s ambition had been to reach a comprehensive set of mutual decisions on financial services equivalence with the EU. As that has not happened, the UK is moving forward, continuing to cooperate on questions of global finance, but each as a sovereign jurisdiction with our own priorities. He added that the UK now has the freedom to do things differently and better, which the country intends to use fully. He gave reassurance that the EU will never have cause to deny the UK access because of poor regulatory standards. The UK already has one of the world’s most robust regulatory regimes for central counterparties and it plans not to weaken but strengthen that regime.

He also added that it is entirely within international norms for like-minded jurisdictions to use each other’s market infrastructure.

Read further analysis of the speech here.

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.

The Governor of the Bank of England on economic recovery

Andrew Bailey, Governor of the Bank of England, said in a speech this week that Covid has not had the same impact on the economy as other shocks did in the past. That is because lockdown affected both supply and demand in the economy. The fact that the UK authorities supported many people’s wages and helped business to keep going during lockdown means the economy should bounce back quicker. However, Bailey said that the Bank of England does expect the economy to suffer long-term damage.

Last year, UK GDP declined by an annual growth rate of 9¾% and, based on the Bank’s last forecast in early May, it is expected to grow by 7¼% this year. The Governor said that the good news is that the economy is only around 5% smaller than it was eighteen months ago, and the gap is closing quite quickly. The economy is bouncing back rapidly and with that has come a rise in inflation. The Governor said that the expectation is that the rise will continue in the near term as we go through the rest of this year, such that CPI inflation is expected to pick up further above the target, owing primarily to developments in energy and other commodity prices.

European Commission adopts adequacy decisions for the UK

On 28 June the European Commission adopted two adequacy decisions for the UK - one under the General Data Protection Regulation (GDPR) and the other for the Law Enforcement Directive. Personal data can now flow freely from the EU to the UK where it benefits from an essentially equivalent level of protection to that guaranteed under EU law.

The adequacy decisions also facilitate the correct implementation of the EU-UK Trade and Cooperation Agreement, which foresees the exchange of personal information, for example for cooperation on judicial matters. Both adequacy decisions include strong safeguards in case of future divergence such as a ‘sunset clause', which limits the duration of adequacy to four years.

The approval by the EU’s executive came only days before an interim solution to keep data flowing across the Channel after Brexit ran out. The UK's data protection system continues to be based on the same rules that were applicable when the UK was in the EU. The UK has fully incorporated the principles, rights and obligations of the GDPR and the Law Enforcement Directive into its post-Brexit legal system. With respect to access to personal data by public authorities in the UK, notably for national security reasons, the UK system provides for strong safeguards. In particular, the collection of data by intelligence authorities is, in principle, subject to prior authorisation by an independent judicial body.

The UK government welcomed the move, which rightly recognises the country’s high data protection standards.

Latest PIMFA Press Releases

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

Latest PIMFA Press Coverage

International Adviser: Help for UK professionals and firms to deliver services overseas

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

Actuarial Post: Call for FCA proposals to

PIMFA voices disappointment at fee approach for Appointed Representatives

Citywire/New Model Adviser: FCA cuts AR

lead savers towards advice

fees to £75 and confirms advisers will pay PIMFA launches their first industry awards to recognise companies promoting diversity and inclusion

£82m The Wealth Net: PIMFA welcomes FCA’s

PIMFA welcomes FCA plans to stop Claims Management Companies from ‘Phoenixing’

pension saver proposals

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

UK Government Green Financing Framework

On 30 June 2021 HM Treasury and the Debt Management Office (DMO) published the UK Government Green Financing Framework. The document sets out the Government’s ambitious climate and environmental agenda and its vision for enhancing the UK’s leadership as the world’s pre-eminent green financial centre. The Framework also details how the proceeds from the Green Gilt and retail Green Savings Bonds will finance expenditures to help tackle climate change, biodiversity loss and other environmental challenges, while creating green jobs across the UK. As part of this, the Framework lists the six types of green expenditures that will be financed across the UK by the Green Gilt and retail Green Savings Bonds: clean transportation, renewable energy, energy efficiency, pollution prevention and control, living and natural resources and climate change adaptation.

The Framework also commits the government to annual allocation reporting and biennial reporting on environmental impacts and social co-benefits, ensuring transparency for retail and institutional investors and other interested parties. Green Financing will be a multi-year programme, and HM Treasury will announce future years’ Green Financing targets as part of its usual approach to debt management. In May 2021, the UK Debt Management Office (DMO) announced that the first Green Gilt will be issued in September 2021, subject to demand and market conditions. National Savings and Investments (NS&I) announced on 30 June that Green Savings Bonds will go on sale later in the year, with full details available on the NS&I website.

Chancellor agrees new financial partnership between UK and Singapore

An historic new partnership for financial services between the UK and Singapore, which will help to boost jobs and investment in the UK, was agreed by the Chancellor on 30 June, facilitating closer regulatory cooperation. The UK and Singapore have also committed to strengthen cooperation on areas such as fintech, green finance and cyber security. This is part of the government’s plan to ensure the UK remains a leading global financial centre and marks an important development in the UK’s strategy of pursuing global financial partnerships now that the UK has left the EU. The Partnership was agreed by Rishi Sunak and Singapore’s Senior Minister and Chairman of the Monetary Authority of Singapore, Tharman Shanmugaratnam.

Speaking after the signing, the Chancellor said that the Partnership is backed up by a memorandum of understanding which aims to reduce frictions for firms serving UK and Singapore markets by recognising that each other’s financial services regulatory regimes achieve similar outcomes. Both parties also agreed to cooperate on fintech and had a productive conversation on recent technological developments including new payment methods, such as e-wallets and digital financial services, and agreed to continue sharing information. An additional memorandum of understanding on cybersecurity was also signed, providing a formal basis for co-operation between the UK and Singapore on the finance sector’s cybersecurity, in order to improve the resilience of both nations’ financial systems.

EVENTS & LEARNING

Diversity & Inclusion Awards Entries Close: 17 August | Event Date: 20 October 8 Categories 15 Judges

6 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

WEBINAR How to Die Well - A practical guide to death, dying and loss 29 July 2021 | 18:30 - 19:30 In partnership with Royal London, photographer and filmmaker Rankin and host Andrea Fox will be joined by Guardian columnist and bestselling author Rhik Samadder, palliative care expert Dr Kathryn Mannix, and financial expert and broadcaster Sarah Pennells.

Since the outbreak of the COVID-19 pandemic, the subject of death has become more prominent in our daily lives than ever before – and yet we still find it incredibly hard to talk about. This is understandable, but important to overcome if we want to better prepare ourselves and our loved ones.

This livestream event will blend personal stories with emotional, practical, & financial guidance to show that dying well can be a fundamental part of living well.

Find out more and register here.

IOSCO publishes a report on sustainability related issuer disclosures

The Board of the International Organisation of Securities Commissions (IOSCO) published a Report on Sustainability-related Issuer Disclosures on 28 June 2021. The report elaborates on IOSCO’s vision for an International Sustainability Standards Board (ISSB) under the International Financial Reporting Standards (IFRS) Foundation, describing the role the ISSB could play in setting a common global baseline of sustainability-related corporate reporting standards.

The FCA has co-chaired the working group that developed the report and supports IOSCO’s vision. Complete, globally consistent and comparable information on climate change and other sustainability matters will help markets price sustainability-related risks and opportunities and support the transition to a more sustainable future. The FCA welcomes the good progress that is being made towards a common global baseline of reporting standards, developed under the proven governance model of the IFRS Foundation.

The New Financial Global Financial Centres Index

A new report by the New Financial Global Financial Centres Index, ranks financial centres around the world in quantitative terms based on the scale and value of financial activity.

Their latest report focuses on measures of size and volume of financial activity, making a clear distinction between domestic and international financial activity. The report’s rankings highlight the dominance of the UK as a financial centre in Europe. In terms of the overall size of domestic and international financial activity, the UK is nearly three times larger than France, Germany or Luxembourg.

For international activity, which is most at risk from Brexit, the UK is in a league of its own: its score of 56 is more than double that of Luxembourg and roughly five times higher than Germany and France. The report says that it is too early to capture the impact of Brexit on international financial activity but the UK’s lead in key sectors such as foreign equity trading and foreign bank assets will already have been dented.

The UK is a global leader in trading & clearing and 2nd in banking and asset management, largest in the world in 6 international metrics and in the top 3 in another 10. The UK is the largest European hub for trading & clearing, equity markets, private equity & venture capital, asset management and banking. It has the best wider environment in Europe and 2nd best in the world, after the US. The report also notes that international activity has grown at a lower rate than the global average since 2016 while domestic activity has stagnated.

FCA publishes first IFPR domestic implementation Policy Statements

The FCA has published their first IFPR domestic implementation Policy Statements (PS21/6) with ‘near final rules’ on: 1.Categorisation of Investment Firms (SNI or non-SNI); 2.Prudential Consolidation and the Group Capital Test; 3.Definition of Own Funds; 4.Definition of Own Funds Requirement; 5.Own Funds Requirement Transitionals; 6.Concentration Risk and K-CON; and 7.Reporting Requirement.

FCA: Handbook Notice 89 – Training and Competence Sourcebook

On the 24th June 2021, the FCA made changes to the Training and Competence Sourcebook, requiring firms to notify the relevant accredited bodies when notifying the FCA of a retail investment adviser’s failure to comply with SPS and APER or COCON. Such reports must be made as soon as reasonably practicable after firms become aware of or have information which reasonably suggests that a retail investment adviser has failed to comply with APER or COCON and the event is significant.

The FCA has agreed that it would be beneficial to give firms and accredited bodies more time to adjust to the new notification requirements. The FCA has therefore decided to provide a one-year implementation period for firms and accredited bodies to implement the TC 2.1.31AR requirements. This will give firms and accredited bodies time to agree a suitable format and process for the notifications.

You can read the Handbook Notice in full here.

FCA finds weaknesses in ‘host’ Authorised Fund Management firms’ governance and operations

The FCA have published a review of Authorised Fund Managers (AFMs) that delegate investment management to third parties.

They found that, whilst some firms were operating well, others did not meet the FCA's standards and they found weaknesses in firms’ governance structures, conflicts of interest management and operational controls.

All AFMs and host AFMs should review the findings and act accordingly.

FCA publishes regulated fees and levies 2021/22

The FCA have published their final 2021/22 regulated fees and levies, including feedback on CP21/8. The fees and levies cover the FCA, the Financial Ombudsman Service, the Money and Pensions Service (MaPS), Devolved Authorities and Treasury’s expenses for tackling illegal money lending.

All fee-payers will be affected by this Policy Statement and firms can use the FCA's online fees calculator to calculate their individual fees based on the final rates in this PS. The calculator will also cover PRA fees (where applicable) and FSCS levies. The FCA will invoice fee-payers from July 2021 onwards.

The full Policy Statement can be read here.

PIMFA's Consultation Responses

PIMFA’s latest Consultation Response is to the FCA's CP21/9 on the changes to UK MiFID’s conduct and organisational requirements.

Read this and all other PIMFA consultation papers here.

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