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Conference report: PIMFA's first compliance summit

Chris Hamblin, Editor, London, 5 July 2017

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More than one hundred compliance experts attended the Personal Investment Management & Financial Advice Association's compliance conference in London, an exclusive event that covered the main issues for compliance departments in the United Kingdom’s retail investment management and financial advice industry.

It was announced some weeks ago that the Wealth Management Association and the Association of Professional Financial Advisors would merge into an investment management and financial advice association. The 'P' was added before the annual general meeting on 28/30 May, with the merger taking effect on 1st June. Ian Cornwall, the new body's director of regulation, told Compliance Matters that compliance officers at wealth management firms were somewhat beleaguered by the mountain of regulation promised by techological developments, the Capital Requirements Directive, PRIIPS, Brexit and MiFID II. He thought that the conference covered all the right subjects and said that the next one would be on 30th September.

Cornwall told the compliance officers during the conference that their work on the subjects of suitability, CASS (the Financial Conduct Authority's client assets sourcebook), and best execution "should be in the tin" by now. In other words, every company should now have made the necessary changes. However, he sympathised with firms' struggles to keep up: "It's very hard for compliance departments."

One speaker from the Financial Ombudsman Service looked at the organisation's new processes for handling complaints, saying that the Ombudsman is now more proactive than before and more willing to ring people up and find out facts about complaints at an earlier stage. The speaker also exploded a few myths. The 'uphold rate' for complaints stands at 30-33%, which means that (contrary to popular opinion) the Ombudsman does not always favour the client and no complaint process is a foregone conclusion. Moreover, the complaint rate is low and therefore less of a problem that most people in the industry think it is. There is an upper cap on complaints but this does not rule out HNWs in the main; most complainants are eligible to put their cases before the Ombudsman. Cornwall added: "I always work on the assumption that they are."

The Senior Managers' Regime also received some attention, with PIMFA advising firms to look at the situation in tandem with employment lawyers. Cornwall was not convinced that the two sets of rules actually clashed, but thought it worth every firm's time to look into it.

Another hot topic was that of legal privilege, a recent article about which can be found here. The conference also went on a walk through the Packaged Retail and Insurance-based Investment Products (PRIIPs) legislation, the EU's new disclosure regime for retail investment products, asking about the meaning of the new key information document or KID. Investigations were another topic, with role-playing used to illustrate the problems.

Nick Miller, who is in charge of asset management supervision at the Financial Conduct Authority, approved of the merger that created PIMFA and brought wealth managers together with financial advisors who deal with everybody (although the 'advice gap' created by the Retail Distribution Review has pushed those advisors further into the HNW market than before). He extolled good culture and talked about cyber resilience. On the subject of MiFID II, his message was almost the same as Stephen Hanks' message at our own conference in May: the regulator expects firms to be ready for the deadline of 3rd January 2018 but it accepts that things are very difficult for firms because plenty of guidance is coming in late. One of those things is a series of "questions and answers" from the European Securities and Markets Association; another is "the guidance consultation on suitability." Cornwall added: "We're not at a steady state."

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