PIMFA Weekly News Bulletin - 6 December 2021

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PIMFA WEEKLY NEWS BULLETIN | 6 December 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.

FCA: 'A stronger Nudge to Pensions Guidance'

The FCA have published a policy statement on its 'Stronger Nudge to Pensions Guidance' proposals. Under these, providers will have to offer to arrange a pension guidance session for the consumer at the point at which they seek to decumulate or transfer, unless the consumer opts out.

For further queries please contact Simon Harrington to discuss.

FCA Fees and Levies

The FCA has published its fees and levies proposals for the coming year. The proposals contain an increase in the minimum fee to £2,200.

PIMFA are currently formulating our response, so we would be grateful if you could contact Simon Harrington with any thoughts or feedback.

Improving the Appointed Representatives Regime

The FCA are consulting on additional reporting and regulatory requirements for Principal firms who operate an Appointed Representatives (AR) model. In addition, HM Treasury are considering potential wide-ranging changes to the AR model by way of a call for evidence.

Both represent potentially significant changes for PIMFA members who operate an AR model.

Please contact Simon Harrington with any contributions to the call for evidence.

HM Treasury Future Regulatory Framework - PIMFA overview

PIMFA has produced an overview of the HM Treasury's (HMT) second consultation on the UK's future regulatory framework - it gives brief details of the measures proposed by the government and of the rationale behind them. The 16 measures proposed can be split into two broad camps, namely those focussing on:

(1) the duties of the FCA/PRA as regulators and how their relationships with HMT/Parliament operate; and

(2) how the regulators exercise their rule-making and policy-making functions and how stakeholders interact with them to influence regulatory policy.

The HMT paper is open for comment to 9 February 2022. Input from members on any aspect of the paper is welcome but we would particularly appreciate your thoughts around the measures in the second camp that are likely to have the greatest impact on how regulators engage with firms when developing policy and finalising rules and how regulators apply their enhanced post-Brexit powers in the course of supervising firms.

Please send feedback or questions to Sarah McGuffick.

PIMFA & Accenture Survey

PIMFA in collaboration with Accenture are currently conducting a short survey on what Wealth Management firms are doing to meet current challenges and opportunities and how they intend to future proof and secure their franchises.

This survey forms an integral part of our research to provide a view of the key impacts on the industry post pandemic and reflect on how firms are evolving.

We expect the Survey to take you no longer than 20 -30 minutes to complete.

To complete the survey, please click 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 PIMFA welcomes lower Financial Services Compensation Scheme levy forecast PIMFA delighted to welcome Geoff Towers to board as non-executive director

Latest PIMFA Press Coverage

The Times: Regulator to raise financial firms’ fees

Money Age: FCA consults on changes to AR regime to reduce potential harm to consumers/markets The Intermediary: PIMFA calls on FCA to

PIMFA delighted to announce winners in first Diversity & Inclusion Awards FCA must focus attention on

make better use of data in supervising Appointed Representatives

FT Adviser: The direction of travel for

transformation programme following

FSCS levies is not one that brings

departure of Chair Charles Randell

confidence

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

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.

Industry Events

PROTECTION REVIEW | CONFERENCE, DINNER & AWARDS

8 December 2021 PIMFA are proud to be partnering with Protection Review Conference, Dinner and Awards for 2021. Speakers on the day include: FT Adviser, AIG, Sesame Bankhall Group, LifeSearch, Cicero and more.

To find out more about the event, please click here.

PIMFA members can register for their FREE place here.

FCA Confirms New Listing Rules

Following a consultation in the summer, the FCA recently published a policy statement on Primary Market Effectiveness Review: Feedback and final changes to the Listing Rules.

The changes to the listing rules are: •

a targeted form of dual class shares structure within premium listing which the FCA

believe will reduce barriers to companies listing in the UK and encourage private companies to consider listing at an earlier stage, while still retaining high standards for investors, which in turn will encourage more companies to enter the UK Market and ultimately increase the investment opportunities for investors •

an increased minimum market capitalisation threshold for listing to £30 million, for

shares in companies other than funds which should create an environment of increased investor protection and confidence

The FCA are of the opinion that the above will enhance the attractiveness of the UK Market. The FCA are also implementing •

a reduced level of shares required to be in public hands at listing to 10% from the

current requirement of 25% •

minor modernisation to the Listing Rules, Disclosure Guidance and Transparency Rules

(DTRs), and Prospectus Regulation Rules (PRR)

The new rules came force on 3rd December 2021, but the package of minor changes to modernise and streamline our primary markets rule books will come into force on 10 January 2022. The FCA have also stated that they will be engaging with market participants to discuss specific issues and ideas raised before providing more detailed information on the responses in the first half of 2022.

If you have any questions, please contact Michael Cahill.

FCA Publish 3rd IFPR Policy Statement

On the 26th November, the FCA published PS21/17: A new prudential regime for MiFID investment firms. This is the third policy statement on the new UK IFPR regime, which will come into force on the 1st January 2022. Although the FCA has made some amendments to the original proposed rules in CP21/26 as a result of the feedback received, the final rules, taken as a whole, do not differ significantly from the version consulted upon.

In relation to disclosure, the FCA has made some changes to the disclosure requirements it proposed, in particular to the level of application. It has also clarified when FCA investment firms must publish their first set of disclosures under the new regime and has introduced some exemptions from the requirement to disclose quantitative remuneration data, when certain criteria are met. The Policy Statement also covers a miscellaneous set of topics, such as technical standards, enforcement, applications and notifications, completing the change to the new regime.

You can read the Policy Statement in full here.

FCA PS21/20: Changes to UK MiFID Requirements

PS21/20 confirms the limited changes to UK MiFID requirements consulted on in CP21/9.

This means that, effective from 1 December 2021, firms that execute orders will no longer have to produce an annual RTS 28 report on their top five execution venues; Section 11 of Statutory Instrument 2021/774 achieves the same outcome for firms that receive/transmit orders. The requirement for RTS 27 reports, whereby execution venues provide quarterly execution quality metrics, has also been deleted from the Handbook.

To reduce the regulatory barriers associated with producing/using SME research, PS21/20 also amends the inducements rules so that the COBS 2.3A.19R list of “acceptable minor non-monetary benefits” is extended to include (a) research on listed/unlisted companies with a market cap below £200m that is provided on a re-bundled basis or for free; (b) corporate access services relating to listed/unlisted companies with a market cap below £200m; (c) third party research relating to fixed income, currency or commodity instruments; (d) research provided by independent research providers not involved in trade execution; and (e) third party written material that is “openly available” to any firm/person wishing to receive it.

The full Policy Statement can be read here.

FCA and Practitioner Panel Publish Findings from 2021 Joint Survey

The FCA and the Practitioner Panel have published a report from their 2021 joint survey of FCA regulated firms. The survey gives views across the financial services sector of the FCA’s performance as a regulator and it provides important information to help the FCA achieve its objectives.

Key themes from the feedback included: a positive view, particularly amongst larger firms, of the FCA performance during the pandemic; some firms said that the regulator has a reactive, rather than proactive, approach to risk.

In particular, some firms are concerned that there may be significant or emerging risks in the market of which the FCA is not aware. This is a key area of focus for the regulator’s transformation work. The FCA says it is concerned about the number of smaller firms that suggested they aren’t engaging with consultation processes and the regulator says it will ensure that all open consultations are included in their Regulation Roundup newsletter.

In addition, the FCA has trialled a new online response process, intended to make it easier for firms to respond to consultations. The trial was successful, and the new process will be rolled out soon. Firms are often unclear about why the FCA collects the data it requests from them and says it is feeding these findings into work to reduce regulatory burden.

FRC Publishes Analysis of Stewardship Reporting

On 1 December the Financial Reporting Council published ‘Effective Stewardship Reporting: Examples from 2021 and expectations for 2022’, which analyses reports from the first signatories to the revised Code published in September 2021. There continues to be high quality of disclosures in the areas of governance, resourcing, and the integration of stewardship and ESG factors with investment.

However, there is still room for improvement in explaining how they manage stewardshiprelated conflicts of interest, how managers review and assure their stewardship activities, and how they monitor and hold to account service providers operating on their behalf. The report outlines key areas of focus for applicants to report on in the future, such as how market-wide and systemic risks are being managed, stewardship in asset classes other than listed equity, detailed reporting on the outcomes of engagement and providing case studies to illustrate both process and impact.

TheCityUK’s Latest Report ‘Enabling growth across the UK 2021’

Financial services productivity was nearly twice as high as productivity in the UK economy as a whole in 2019; output per worker at £114,793 vs £58,261 respectively, according to a new report from TheCityUK. The report, ‘Enabling growth across the UK 2021’, found that this differential in output per worker was present in all parts of the UK, and is especially striking in Scotland (£112,585 vs £55,75)1 and London (£162,360 vs £81,408), the West Midlands (£89,680 vs £50,774), and the North West (£88,011 vs £51,559).

The report also examines the total contribution the industry and its composite sectors make to the UK’s nations, regions, towns, and cities. It shows of the 2.3 million people in

industry employment, 1 in 14 British jobs, two thirds of these are based outside London.

This is roughly equivalent to the entire populations of Birmingham, Glasgow and Edinburgh combined. Financial and related professional services contributed £193.8bn to the UK economy in 2019.

The report also found that there are several key clusters of financial and related professional services activities across the UK. Major UK centres with more than 30,000 people in employment within the financial and related professional services industry include Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester.

Overall, 21 towns and cities in the UK each have more than 10,000 people in employment in the industry. The West Midlands has a significant concentration of activity in banking and management consulting. Scotland is rapidly becoming a global leader in FinTech. The East of England is a hub for the insurance and accountancy sectors, and the North West is a particular centre for asset and wealth management and management consulting, and is also the second largest legal centre in the UK after London.

UK-Norway Deal Comes into Effect

New UK-Norway trading arrangements came into effect on 1 December 2021. It follows a joint deal signed in July with Norway, Iceland and Liechtenstein, and will bring the UK and Norway closer than ever before, creating a new services and investment relationship with lower tariffs and exclusive duty-free quotas for UK exporters.

The deal provides assurance to the UK’s booming FinTech industry, enabling innovative FinTech firms to provide new services in Norway, without providing them elsewhere beforehand. Cutting-edge digital provisions mean UK firms exporting to Norway can now benefit from a limit on unnecessary paperwork. Electronic documents, contracts and signatures mean goods can move seamlessly across borders, saving exporters both time and money.

UK firms looking to set up or expand operations in Norway can now transfer staff and their families for four years. Norway has stripped back residency requirements for senior management and directors, meaning more UK talent can sit on Norwegian company

boards without having to relocate. Business travellers can also enjoy more streamlined and straight-forward visa processes.

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