Compliance Digest: 1st December 2023
This is a summary of FCA activity this week and articles from various industry news feeds that are of interest to the advisory sector of the industry.
This week we cover:
The FCA’s statement on communication relating to PRIIPS and UCITS
Personal investment firms that give bad advice to hold capital for redress
Sustainability disclosure and labelling regime confirmed by the FCA
The Regulatory Initiatives Grid
Podcast: Three new pension allowances advisers must understand before April
Statement on communications in relation to PRIIPs and UCITS
There has been an ongoing debate about the veracity of the costs and charges disclosure in the PRIIPs Key Information Document (KID), the UCITS Key Investor Information Document (KIID) and MiFID II requirements. The FCA has released a statement regarding the revision of the current cost disclosures. The news release can be read here.
Personal investment firms that give bad advice to hold capital for redress
The FCA has announced proposals to require personal investment firms to set aside capital so that they can cover compensation costs and ensuring the polluter pays when consumers are harmed. The proposals would require personal investment firms – often referred to as investment advisers - to calculate their potential redress liabilities at an early stage, set aside enough capital to meet them and report potential redress liabilities to the FCA. Any firm not holding enough capital will be subject to automatic asset retention rules to prevent them from disposing of their assets. The announcement includes hotlinks to the consultation paper CP23/24, an infographic showing how the system will work and the FCA’s Dear CEO letter on the subject.
Sustainability disclosure and labelling regime confirmed by the FCA
In a press release, the FCA has confirmed a substantial package of measures to improve the trust and transparency of sustainable investment products and minimise greenwashing. Research has shown that investors weren’t confident that sustainability-related claims made about investments were genuine. This isn’t helped by a lack of consistency when firms use terms such as 'green', 'ESG' or 'sustainable'.
To tackle this issue, the FCA will introduce:
an anti-greenwashing rule for all authorised firms to make sure sustainability-related claims are fair, clear, and not misleading;
product labels to help investors understand what their money is being used for, based on clear sustainability goals and criteria; and
naming and marketing requirements so products cannot be described as having a positive impact on sustainability when they don’t.
The press release includes, within the notes to editors, hotlinks to relevant supporting documents, including the Policy Statement PS/23/16 Sustainability Disclosure Requirements and investment labels.
The Regulatory Initiatives Grid
This Grid from the Financial Services Regulatory Initiatives Forum sets out the regulatory pipeline. This is so the financial services industry and other stakeholders can understand – and plan for – the timing of the initiatives that may have a significant operational impact on them.
The Forum has also published the Grid in the form of an interactive dashboard and an Excel spreadsheet to help users interact with the underlying data. The grid and accompanying documents are available via both the FCA and PRA websites.
Podcast: Three new pension allowances advisers must understand before April
Citywire has published a podcase in conjunction with M&G pension specialist Kirsty Anderson, who explains the new pension rules that advisers need to understand ahead of the scrapping of the lifetime allowance in April. You will need to register for Citywire to access the podcast.
Ian Ashleigh
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