In this article the compliance supremo at PIMFA, the UK’s trade body for personal investment services and financial advice, weighs up the issues that have vexed compliance officers at wealth management firms this year.

Pensions

Upheavals in the Pensions Industry have also kept us busy and during the last year we have devoted much of our attention to the DB-to-DC (defined benefit, defined contributions) transfer market, especially after the British Steel débâcle in Port Talbot.

The FCA has continued to monitor the market, noting that too many people are transferring their safeguarded benefits. We expect that the beginning of 2020 will see further intervention in the market with a likely ban on contingent charging structures as well as the introduction of more prescriptive pricing guidance. Beyond the act of advice, we also expect the regulator to concentrate on the SIPP (self-invested personal pensions) market. A broad market study is scheduled to take place early next year.

Aftermath of RDR

In 2019 the regulator published a 'call for evidence' regarding the implementation of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR). It asked whether or not its interventions in the market had made it easier to for consumers to obtain financial advice and, more broadly, whether they had improved results for those consumers.

PIMFA largely thinks that RDR has had a positive effect, although the 'cost of doing business well’ can be a heavy one. Many believe that the cost of advice has increased, access to advice has declined and barriers to entry for new advisory firms have gone up.
 
We expect this initial call for evidence to become a more substantial investigation into the advice sector and some believe it to be the harbinger of a market study at some point in 2020.

One of the areas on which the FCA will concentrate in the investment management sector in 2020 is new prudential regime for MiFID investment firms that the European Union is introducing, having passed the Investment Firms Regulation (IFR) and Investment Firms Directive (IFD) on 5th December. PIMFA has been talking to European agencies and the FCA on this issue for some time and we are expecting the FCA to produce a consultative paper on this issue in the first half of 2020, possibly in the first quarter.

When the union leaves the union

Taking a more macro-economic view, PIMFA has been advising its members about planning for Brexit for three years now. Since the Conservatives secured a sizeable majority at the recent election, we are almost certain to leave the EU on the 31st January. After that will come a very hectic 11 months of trade negotiations during which the UK will still follow all EU rules and regulations. We shall use this time to lobby the Government to strike a comprehensive and balanced deal for the UK's financial services sector, with the period of transition ending in December 2020.

Residual matters

Other areas of work for PIMFA during 2020 will be the Law Commission’s work on intermediated securities, a continuing review of claims that people make to the Financial Ombudsman Service and the Financial Services Compensation Scheme, cyber security - with a cyber resilience conference planned for April - and financial crime, also with a conference in February. Throughout, we aim to ensure that the current debate about future regulation does not centre solely on policy or the FCA's rulebook, but also on the way in which supervision serves the marketplace, both now and in the future.

* Ian Cornwall can be reached on +44 7448 7100 or at ianc@pimfa.co.uk