PIMFA Weekly News Bulletin - 7 February 2022

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PIMFA WEEKLY NEWS BULLETIN | 7 February 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.

Compensation Framework Review

Following extensive lobbying from PIMFA, the FCA have published a discussion paper on potential changes to the Compensation Framework.

We are committed to continuing to shape the dialogue around this issue and, as a result, are inviting interested parties to participate in our response to the Review. We will be hosting a roundtable with FCA colleagues in March but would like to work through issues arising from the review more closely with firms.

Should you have interest in participating, please contact Simon Harrington.

Latest PIMFA Press Releases

Latest PIMFA Press Coverage

PIMFA adds Qwil Messenger as PIMFA Plus Partner in drive towards further

FT Adviser: Will a risk-based FSCS levy become reality?

technology partnerships Managers of Wealth Europe: PIMFA PIMFA delighted to welcome Redmayne Bentley’s Nick Bettison to its Board

boosts board

Insurance Post: Analysis: Weighing up the MyRegData becomes latest PIMFA Plus

FCA's consumer duty rules

Partner PIMFA welcomes FCA’s move to

The WealthNet: FCA reporting tool becomes PIMFA Plus Partner

strengthen financial promotions rules to protect consumers

Reuters: Britain to curb marketing of crypto investments

PIMFA welcomes extension of 10% depreciation notification rule flexibility but calls for longer term reform

Raconteur: Why retailers must balance personalisation and privacy

PIMFA's Latest Consultation Responses

PIMFA’s latest Consultation Response is to the FCA DP 21/4 on Sustainability Disclosure Requirements (SDR) and investment labels

Read this and all other PIMFA consultation papers here.

PIMFA Events & Learning

Following on from the HUGE success of the PIMFA Virtual Fest series in 2021, PIMFA is proud to announce the Virtual Fest is back for 2022, this time taking place over 2 weeks.

Registration is open now, please click here to confirm your place.

Unlike previous years (where the conference took place over 2 days), the Virtual Fest 2022 will be taking place over 2 weeks, with exclusive and limited content released each day and available on demand throughout so that you can enjoy at a time which suits you best.

The Virtual Fest 2022 is a great opportunity for attendees to gain valuable insights, hear from industry experts, earn CPD hours and make connections with fellow colleagues.

View Upcoming PIMFA Events & Learning here

Chancellor's statement to the House of Commons

In a statement to the House of Commons on 3 February, Chancellor Rishi Sunak said that the UK’s economic recovery has been quicker and stronger than forecast. It was expected to return to pre-crisis level at the end of 2022, but instead it got there in November 2021 – a full year earlier.

Unemployment was expected to peak at nearly 12% and instead, it peaked at 5.2% and has now fallen to just over 4% - saving more than 2 million jobs. The UK is the fastest growing economy in the G7 this year with over 400,000 more people on payrolls than before the pandemic. The Chancellor said that borrowing is set to fall from £320bn last year, the highest ever peacetime level, to £46bn by the end of this Parliament.

Following energy regulator Ofgem’s announcement of an increase to the energy price cap as a result of the soaring global wholesale price of gas, the Chancellor announced a £9.1 billion Energy Bills Rebate to support families through rising global energy prices.

Recognising that the growing cost of living pressure was the “number one issue on people’s minds”, Rishi Sunak said this package would support hard working families. The Energy Bills Rebate will provide around 28 million households with an upfront discount on their bills, worth £200. Energy suppliers will apply the discount to domestic electricity customers from October, with the Government meeting the costs. The discount will then be

automatically recovered from people’s bills in equal £40 instalments over the next five years. This will begin from 2023, when global wholesale gas prices are expected to decrease.

Bank Rate increased to 0.5%

The Bank of England’s Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target, in a way that helps to sustain growth and employment. At its meeting, ending on 2 February 2022, the MPC voted by a majority of 5-4 to increase Bank Rate by 0.25% points, to 0.5%. Those members in the minority preferred to increase Bank Rate by 0.5% points, to 0.75%.

Global and UK activity returned to their pre-Covid-19 levels towards the end of last year.

The emergence of the Omicron variant is expected to have depressed activity somewhat in December and January, but its economic impact is likely to be limited and of short duration, and UK GDP is expected to recover in February and March such that output returns to its pre-pandemic level once again by the end of the first quarter.

The Labour Force Survey unemployment rate fell to 4.1% in the three months to November and is expected to fall further in the near term, to 3.8% in 2022 Q1. Beyond the near term, UK GDP growth is expected to slow to subdued rates. The main reason for that is the adverse impact of higher global energy and tradable goods prices on UK real aggregate income and spending. As a result, the unemployment rate is expected to rise to 5% and excess supply builds to around 1% by the end of the forecast period.

EU Taxonomy: Commission presents Complementary Climate Delegated Act to accelerate decarbonisation

On 2 February 2022, the European Commission presented a Taxonomy Complementary Climate Delegated Act including, under strict conditions, specific nuclear and gas energy activities in the list of economic activities covered by the EU taxonomy. The Commission said that the criteria for the specific gas and nuclear activities are in line with EU climate and environmental objectives and will help accelerating the shift from solid or liquid fossil

fuels, including coal, towards a climate-neutral future.

The Taxonomy classification does not determine whether a certain technology will or will not be part of Member State energy mixes. The objective is to step up the transition, by drawing on all possible solutions to help us reach our climate goals. Taking account of scientific advice and current technological progress, the Commission considers that there is a role for private investment in gas and nuclear activities in the transition.

The gas and nuclear activities selected are in line with the EU's climate and environmental objectives and will allow us to accelerate the shift from more polluting activities, such as coal generation, towards a climate-neutral future, mostly based on renewable energy sources. Once translated into all official EU languages, the Complementary Delegated Act will be formally transmitted to the co-legislators for their scrutiny.

Once the scrutiny period is over, and if neither of the co-legislators objects, the Complementary Delegated Act will enter into force and apply as of 1 January 2023.

Treasury Select Committee Report on Economic Crime

On the 2nd February, the Treasury Select Committee published its report on Economic Crime. Some of the key recommendations include: •

Making economic crime a priority for law enforcement and ensuring that law

enforcement agencies are properly resourced to tackle the scale of the problem; •

Amending the draft Online Safety Bill so that online firms would need to actively remove

fraudulent content from their platforms; restrict access to financial promotions services on their platforms to firms that have been authorised by the FCA; ensure financial services advertising regulations apply to online companies.

•

Making it mandatory for payment service providers to reimburse victims of APP fraud;

•

Introducing regulation for the crypto-asset business;

•

Reforming Companies House.

You can read the report in full here.

HM Treasury Guidance on Monetary Penalties for Breach of Financial Sanctions

On the 28th January, the Office of Financial Sanctions Implementation (OFSI) published guidance on the following points: •

an explanation of the powers given to the Treasury in the 2017 Act

•

a summary of OFSI’s compliance and enforcement approach

•

an overview of how OFSI will assess whether to apply a monetary penalty, and what it

will take into account •

an overview of the process that will decide the level of penalty

•

an explanation of how OFSI will impose a penalty, including timescales at each stage

and rights of review and appeal The guidance applies from 28 January 2022 - it replaces guidance for all cases where OFSI becomes aware of a potential breach after 28 January 2022.

You can read the guidance in full here.

New FCA Webpage on Competency and Capability of MLROs and Heads of Compliance

On the 28th January, the FCA published a webpage setting out its expectations that MLROs and Heads of Compliance at authorised and registered firms must be suitably competent and capable of effectively performing their roles.

The webpage sets out some indications of what it would expect from successful candidates in relation to training and level of experience and considerations regarding third party support and capacity required to perform the roles.

You can read the webpage in full here.

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