Virtual Fest 2022 | Session Highlights

MONDAY 14 March 2022

SESSION 1

Opening Keynote – The Regulator’s Priorities

In this opening session, PIMFA’s Tim Fassam, Director of Government Relations and Policy, introduced Therese Chambers, Director of Consumer Investments at the FCA, who covered three key areas – Consumer Investment Strategy, Consumer Duty proposals and the potential opportunities arising from the FCA’s early thinking on the Future Regulatory Framework.

The aim of FCA’s Consumer Investment Strategy is to see a consumer investment market where investors can invest with confidence, understand the risks they are taking and the regulatory protections provided.

She cited 4 clear ambitions for outcomes from the strategy, aimed at striking a balance between commercial viability and customer protection. Detailed proposals are coming later this year

Consumer Duty Proposals

The 2020 Financial Life Survey identified that only 35% of respondents agreed that firms are honest and transparent in their dealings with them. The proposed Consumer Duty, aimed at all areas of financial services, is intended to mark a significant shift in what the FCA expect from all firms providing services to retail clients and the treatment these clients should receive. This ties in to the Consumer Investment Strategy, aiming to give consumers greater confidence in the industry and the products sold to them.

The FCA are looking at 4 compliance outcomes, including Client Communications, Products & Services, Customer Service and Pricing, adding that;

“We want Consumer Duty to act as a catalyst to strengthen competition around a new, high standard of care for the customer and to help firms thrive & innovate. Trust in the sector will only be achieved by providing clients with positive outcomes and experiences from their interactions with our sector”

Future Regulatory Framework

The post-Brexit transfer of EU provisions to the UK handbook will likely form the basis of the UK’s regulatory regime for years to come, giving us the opportunity to tailor our rules to better suit UK markets and consumer needs, providing flexibility where appropriate and allowing a faster approach to known issues whilst remaining anchored to the high international standards which the UK continues to help shape

This transfer will be a sizeable, resource-intensive and multi-year project. Whilst proposals are not finalised, the FCA are thinking about how they execute this transfer in the most efficient and effective way possible and will be relying on the industry to help them achieve this, leading to advancing growth and competitiveness in the future.

MONDAY 14 March 2022

SESSION 2

The Impacts of Russia’s Invasion on the UK’s Economy

We also welcomed Coriolis Technologies CEO Dr Rebecca Harding, who joined PIMFA’s CEO Liz Field to discuss the current Russia/Ukraine war and its huge long term economic impacts on the UK and global economy.

She said that ‘economics has become a domain of warfare’ as NATO’s article 5, outlining the defence of NATO members, doesn’t necessarily equate to military defence and added that globally we have been impressively aligned on sanctions as a whole.

Dr Harding discussed the current economic measures which have been taken against Russia, how economic sanctions might be effected, if they can be escalated and how those will impact areas such as ESG, micro economic impact on household finances and energy consumption.

The Coriolis CEO also spoke about trade borders and future relations, outlining the impact of Russia losing its most favoured nation status and how the G7 has given primacy over the World Trade Organisation (WTO). Dr Harding explained that bringing Russia back into the fold eventually will be a long process, that the WTO doesn’t currently have a mechanism for inclusion or exclusion and that this will be need to become a priority consideration.

Ending the session, Dr Harding looked towards the future and shared her hopes for the end of this humanitarian crisis, adding that it may become a catalyst for us being less dependent on oil, leading to more sustainable trading.

TUESDAY 15 MARCH 2022

SESSION 1

The Global Digital Finance 2021 Annual Report Review On DeFi, NFTs & Stablecoins

In this session, PIMFA’s Head of Regulatory Policy and Compliance, Giulia Lupato introduced Lawrence Wintermeyer, Executive Co-Chair of Global Digital Finance, who offered attendees an insightful discussion on the GDF 2021 Annual Report Review.

GDF is an international, not-for-profit members association of firms in the digital asset and crypto space aiming to develop global standards, codes of conduct and an advocacy agenda for the global didital assets and crypto industry, thereby promoting ‘meaningful’ compliance.

Their Annual Report is a comprehensive resource that covers everything on DeFi, NFTs, and Stablecoins. It features insights from industry leaders, financial institutions, regulators, and policymakers so you can stay up-to-date on all the latest happenings in the digital asset sector.

In 2021, the crypto and digital asset sector grew to a value of over $2 trillion with, according to Lawrence, Bitcoin arguably becoming the best-performing asset over a ten-year period relative to any other asset class on the planet.

Last year also saw many institutions looking at Decentralised Finance (DeFi), an algorithmic finance platform focused on lending and, increasingly, investment management, as a possible way forward for many aspects of financial services in general.

One major trend interesting regulators is the growth in Non-Fungible Tokens (NFTs), particularly popular in the arts and entertainments industry over the last two years dealing in digital art and collectibles, as these offer greater access to the digital community. Increasingly, investment products will be developed and ‘back-ended’ onto NFTs and platform architectures.

The adoption of crypto and digital assets by institutions offering custodial options, such as Fidelity, Standard Chartered and ING, is another big trend. Whereas a year or so ago we saw high net worth individuals looking to access crypto/digital assets as part of a risk-adjusted portfolio strategy, now pension funds are starting to allocate to Bitcoin, in particular, now through either ETFs, or some funds listed on the US exchange.

Crucially, from a regulatory perspective, The US Senate Agricultural Committee has asked the Commodity Futures Trading Commission (CFTC), an independent agency of the US government which regulates the U.S. derivatives markets, including futures, swaps, and certain kinds of options, to look at regulating the crypto spot market, a request which the industry itself welcomes and is a milestone in the journey towards regulation globally.

TUESDAY 15 MARCH 2022

SESSION 2

M&A Panel

Facilitating today’s Virtual Fest discussion on M&A activity and future implications, Simon Harrington, PIMFA’s Head of Public Affairs, asked Ian Woodhouse, Lead Wealth Management Business Model Transformation and Thought Leader for Europe at Accenture, & Michael Barrett, LangCat, for their thoughts on the growth of insurers and asset managers entering the market and their opinions about whether we are seeing a return to an era where organisations do it all and become a ‘one stop shop’.

The conversation then turned to private equity and Michael Barrett, Consulting Director at lang cat financial said that, while there may be some trepidation around private equity entering the sector, there is also a lot of value to be had and opportunities from M&A for firms to reduce costs and improve efficiencies while maintaining good customer outcomes.

He went on to add that advice firms excel when helping clients deal with their ‘moments of truth’ in their financial lives and really demonstrate their value when they are helping people navigate the most complex and vulnerable moments  – and this is what keeps the sector going.

Looking to the future, Ian Woodhouse said that we are seeing a shift in the sector as we start to enter a post-covid world that won’t return to pre-pandemic practices, and that this new hybrid world will provide massive opportunities as we see rise in the attractive value dynamics of the sector across scale, cost management, revenue growth, tech growth and talent.

He went on to discuss how we are witnessing a compressed era of digital change, accelerated by COVID, with both technology and clients changing. He added that things such as machine learning and AI give us an opportunity to scale up and move faster than we ever have before, to introduce new products and serve new segments as they emerge – such as the changing HNW & UHNW demographics and helping to fill the UK advice gap in the UK.

WEDNESDAY 16 MARCH 2022

SESSION 1

The Key Learnings from the Wild West of Fintech

In this session Sam Handfield-Jones, joint CEO of SECCL, discussed the current trends on fintech and wealthtech and how they might apply to the wealth management sector as a whole, with a particular focus on the macro view, the adviser view, operational efficiency and how firms can capitalise on the trends presented.

He touched on four key trends to watch for – Hyper-Customised Propositions.

Illustrating how outsourced infrastructure allows investment entities to build segment-specific propositions. One example of this is American banking operation Daylight, designed especially for the LGBTQ Plus community. This would not have been possible even 10 years ago but technology now enables the building of products for specific, under-represented audiences which have a value set to them.

Embedded finance

For wealth management, this suggests a drift from hitherto traditional offerings to a more integrated model. For example, digital banks like Monzo, Revolut and Starling, with around 15 million UK customers, are now looking at delivering investment services and advice through their existing digital channels.

Greater focus on stewardship, ethical behaviour & ESG

The lines between social media, community, technology and financial services are blurring. Growth in the direct investment space means that more investors will want a greater say in how target companies are run and this will increase as ESG becomes more prevalent.

Financial coaching, guidance and the growing demand for ‘advice’

Sam cited the example of TikTok. With 1 billion users globally, they have seen 1.4 billion views of #stocktok, 4.4 billion views of #PersonalFinance and 41% of 18-24 year olds have sought advice on TikTok.

School leavers are still largely uninformed on the basics of saving & pensions. Yet, according to the statistics above, there appears to be a huge demand for financial advice amongst what is effectively the industry’s next client base. Technology will fill that gap by providing financial coaching, guidance and on-demand advice.

WEDNESDAY 16 MARCH 2022

SESSION 2

IFPR – From ICAAP to the ICARA Process

This session finds Aaron Ghobarah, Director, Regulatory Consulting at KROLL, offering an overview of the context of the principles driving the regime, and a look at the key elements to consider for the process, the assessment, and the review document.

After a recap covering terminology such as Adequate Financial Resources and Drivers of Harm as defined in the Finalised Guidance, Aaron turned to the difference(s) between ICAAP, where the focus was on capital resources, with liquidity introduced later by the FCA and ICARA, which focuses on the control environment and oversight, with liquidity and wind-down featuring prominently. Where the first was a document, the second is a process and this is all about risk management, the control environment and governance – identifying harm is paramount.

The process is basically about identifying, monitoring and mitigating harm and requires directors to be fully engaged with oversight of the ICARA and involve the firm. Also noted was that, where firms manage or oversee risk on a group (consolidated) basis, the ICARA process should occur at that level; where investment firms manage risk at a solo level, the process should occur within each relevant firm.

The process needs to be documented and needs to capture a few things. The language in the regime talks about both the business and operational models and these need to be defined, as there are differences in how harm is assessed. Demonstrating that the process is working properly is key and robust forecasting and stress testing are vital.

The Assessment function deals with Capital (Own Funds), Liquidity and Wind-down and requires that a firm has enough liquid funds available at any time in order to deal with detrimental eventualities as they arise.

THURSDAY 17 MARCH 2022

SESSION 1

Responsible Investments – Preparing for a climate of Change

At Thursday’s opening session, PIMFA’s Maja Erceg, Senior Policy Adviser, EU & Government Affairs, welcomed Ryan Medlock, Senior Investment Development Manager for Royal London, to discuss the current responsible investment landscape and examine best practice around what employers and the financial advice community should focus on.

COP26 galvanised public awareness on this issue. This public concern is leading to political and regulatory change and it’s becoming clear that both policy makers and regulators are using sustainable investment to refresh the focus on investment activity.

In November last year, The FCA published a Discussion Paper exploring how to introduce new sustainability-based rules for advisers, new disclosure obligations under Sustainable Disclosure Requirements (SDR – basically, the UK version of Europe’s SFDR), and a proposed new ‘labelling’ regime, intended to reduce confusion around terminology.

Although there was little hard information in this, it nevertheless indicated that new rules are on the way and that these will be broadly in line with the Europeans. This will be followed by a Consultation Paper later this year.

On identifying investor preferences for the advice market, it’s key for our industry to start looking at how sustainability and responsible investment considerations can be integrated within existing advice models, on an individual basis. Here, Royal London have made a lot of research on this issue available.

Due diligence and fund research will also be crucial. Again, new processes can also be integrated into existing models. For instance, regarding target companies, are they signatories to any codes or initiatives? How are exclusions and ESG integration techniques applied and what is their longevity in the sustainable space?

There remains much to be done and we look forward to the FCA’s forthcoming Consultation Paper for more clarity.

THURSDAY 17 MARCH 2022

SESSION 2

The Growing Case for Alternatives in Uncertain Times

For Thursday’s closing session, PIMFA’s Lead Regulatory Policy Adviser Sarah McGuffick introduced Chris Cox, CFA Fund Manager and Henny Dovland, Business Development Director, both at Time Investments, looking at what alternative asset classes can provide ballast within your portfolio in the current climate, as well as the benefits of real estate and infrastructure for wealth management portfolios.

Essentially, Alternatives are investments with low or no correlation to traditional asset classes such as equities, bonds or cash, all of which face challenges in today’s highly volatile marketplace. They can help offset against equity volatility, can offer more attractive returns than bonds, increase diversification and resilience in portfolios and have the ability to pay attractive levels of income throughout the economic cycle.

Research from Black Rock across 600 European portfolios shows that the average allocation towards alternatives was 22%, indicating that many investors are using liquid alternative strategies to diversify from traditional fixed income in their search for yield. They also found that, whilst the average allocation towards alternatives was significant, the risk contribution was low, showing the potential effectiveness of alternatives as a diversification tool in a volatile marketplace.

Whilst the focus here is primarily on Infrastructure and Real Estate, other Alternative classes include Commodities, Hedge Funds, Private Equity, Venture Capital & FX.

With typical lease lengths of 15-125 years, long-term real estate investment in sectors such as supermarkets, care homes, social housing and data centres are sustainable by nature, providing operational stability, positive environmental and societal benefits, predictable long-term revenue streams and the potential for capital growth with low volatility.

Infrastructure is vital for jobs, businesses and economic growth. Governments believe this too – the UK, EU and US all have huge funds, collectively totalling well over $2 trillion, geared towards building back from the pandemic in a more sustainable and resilient way. Significant percentages of these funds have to spent on things like digital transformation, climate investment and green energy, firmly positioning at least part of these funds in the ESG space, too.

This in turn incentivises significant investment from the private sector, with average returns of between 2.5-6%.

FRIDAY 18 MARCH 2022

SESSION 1

PIMFA Update – What to expect in 2022

In Friday’s opening session, Tim Fassam, Director of Government Relations and Policy at PIMFA, offered attendees an insight into the current policy and regulatory environment, what PIMFA is currently working on and plans for the remainder of 2022.

He began with the implications surrounding both Covid and the war in Ukraine. Both have rightly been the subject of significant political focus and this means less concentration on Financial Services, except where that pertains to the above. This will likely continue for the foreseeable future, with a couple of exceptions.

The Economic Crime Bill has been rushed through, with a second coming later in the year, and sanctions against Russia have taken centre stage. Costs resulting from both Covid and Ukraine, coupled with those associated with the NHS, pensions and the benefits system may lead to wealth taxes, with later increases across the board.

We will also continue to move further away from the European regulatory model as a result of Brexit. The FCA is changing almost every aspect of the way it operates, bringing challenges despite broad industry support for the changes.

Regarding PIMFA itself, we have made good progress. We have fundamentally changed the debate on the FSCS, although the role of supervision remains an issue, as do alternative sources of revenue.

Major work on simplified advice, with a series of proposals to be delivered to the FCA shortly. We have responded to both FCA Consultations on Consumer Duty, gaining valuable clarification, but are still working on extending the very short implementation deadline.

We led the industry response to the IFPR, providing critical technical support to both the FCA and our members, particularly on the new remuneration rules.

Two major successes on financial crime. Initially, we persuaded the government to include user-generated fraud in the Online Safety Bill, and they have now included fraudulent paid-for adverts.

On regulatory architecture, we have worked closely with government on issues such as social policy, cost/benefit analysis and appropriate checks and balances going forward.

Our other priorities for 2022 include work on the advice gap, with a major campaign on Simplified Advice coming shortly, further initiatives on the FSCS, financial education, the future of supervision, access to market, including direct investment and the crypto space, and, later this year, a major piece of work on disclosure, focusing on communications to customers and ESG.

FRIDAY 18 MARCH 2022

SESSION 2

Consumer Duty

In today’s afternoon session, we heard from Hywel Jenkins and Benedicte Perowne from Herbert Smith Freehills, sharing their views on what the Duty is, the broad differences between it and existing rules and how firms can navigate the current areas of concern.

Consumer Duty is the biggest ticket item in the Conduct regulation space at the moment, the most wide-ranging since SM&CR and broader in terms of impact, given that it impacts all of the financial services industry, setting higher standards for a duty of care at every stage. It also represents a significant change for PIMFA firms.

Whilst there are clear similarities between the outcomes in the original Treating Customers Fairly (TCF) initiative and the Consumer Duty package, the new language, initially appearing simpler. is actually much broader, as are the outcomes which Consumer Duty is intended to achieve

The new Consumer principle (Principle 12) imposes a higher and more exacting standard of conduct than existing principles 6 & 7 and must enable a focus to deliver good outcomes on each of their business functions. It is not, however, intended to protect customers from unforeseeable harms, all poor outcomes and risks that the client reasonably understood and accepted.

The 4 desired outcomes – on Products & Services, Price & Value, Consumer Understanding and Consumer Support – all need to be woven into a coherent whole, guiding the entirety of a firm’s consumer interaction.

Firms will need to be able to show how they test and monitor consumer outcomes, including through any supply chain entities, and make changes where necessary. The FCA will focus on failure to do so and continued failure will likely result in enforcement action.

On the implementation timeline, final rules and guidance are due on or by July this year, leaving only 9 months until the final implementation date of April 2023. The clear message from the FCA is that they expect the draft rules, already issued with the second Consultation, will provide enough clarity to begin implementation, so please don’t wait until July.

MONDAY 21 MARCH 2022

SESSION 1

Diversity & Inclusion – How to Gather Data, Use it Effectively and Keep Colleagues Engaged

The second week of V Fest 2022 began with PIMFA’s CEO, Liz Field, introducing Sarah Mason, Diversity & Engagement Manager, The Openwork Partnership, to talk about how to gather data on D&I, use it effectively and keep colleagues engaged.

Talent, Diversity and Inclusion is one of the top 3 issues of concern for PIMFA member CEOs, and is also a priority for the FCA, who released a Discussion Paper on this last Summer. Data gathering is vital to understand where we are, and where we need to go, but is proving challenging for firms, as much of this data falls under Protected Characteristics, of which there are currently 9.

Most firms have at least some shareable data sitting within D&I, such as marital, parental, nationality and age, so we are able to supply the current Career Status of an individual, but data on things like socio-economic background, neurodiversity and sexual orientation are more problematic and needs to be handled with care.

On collecting this sensitive data, Sarah suggests that HR departments could use or adapt what they already have, run a Count Yourself In campaign annually, and actively encourage staff to ‘join the conversation’ by making it clear that the data held by HR is secure and safe from a GDPR perspective and helps us understand the makeup of our business and whether this reflects the makeup of our customer base in a changing world. She also suggests the formation of staff Inclusion Groups to keep the message alive.

She also suggests setting ambitious targets for data gathering. Openwork themselves aim to have 80% of colleagues sharing some or all of their protected characteristics by 2023. As they currently sit, 50% are doing this now so that is a steep hill to climb but, by being entirely open about the ‘hows and whys’ behind this initiative and working hard to engender trust throughout your staff are key to constructing an effective D&I policy.

Office 365 & Openwork Partnership have useful tools which can help.

MONDAY 21 MARCH 2022

SESSION 2

Getting Started in Sustainable Investment – a Practical Introduction for Advisers

In this session PIMFA’s Maja Erceg introduced Julia Dreblow, Founding Director, SRI Services, who also helped PIMFA set up our ESG Academy, offered practical guidance for advisers on sustainable investments. She will be covering topics such as what is on offer and why?, understanding the sustainable investment fund market and what ‘should’ you be doing – now or soon?

After a brief description of SRI’s services for PIMFA members, she went on to a regulatory roundup and to practical help in getting started on understanding different strategies via an SRI-developed tool called FundEcoMarket, which is free to use.

Whether we’re talking about energy consumption, marine ecosystems, deforestation, transport or population size, man-made issues are putting our future at risk and it’s getting worse. We need achieve a fair, profitable and swift transition to net zero, powered by renewable energy, and change our economic model from linear to circular. Julia suggests that this process will be ‘the biggest investment opportunity ever’, but time is short.

She listed ten active fund types in this space, and made the point that they are complimentary, not competing.

Over the last 2 years, government has begun to understand the relevance of financial markets in addressing climate change, in particular, and that the two need to work together. In his speech at Mansion House last year, the Chancellor heralded a ‘new chapter’ in financial services, where sustainability will be far more central than previously.

We’ve seen the TCFD, Government roadmaps and an FCA business plan aiming at improving trust, particularly looking at greenwashing, stewardship, product labelling and technology and, in a ‘Dear Chair’ letter from July last year, FCA issued guiding principles on design, delivery and disclosure, which will help intermediaries and clients alike to make better informed decisions.

Government launched a DP last November on Sustainability Disclosure Requirements (SDR), which they are working through now. An FCA Consultation is due later this year, which should end up producing clear rules for advisers, but it is evident that upskilling will be necessary.

On the practical side, there are four groups of issues that define what the market looks like – Environmental, Social, Governance and Ethical, each with a number of sub-topics attached –  providing a framework for client conversations. These lead to three possible investment approaches – Avoid ( exclusions, ‘do not hiold’), Support (positive, impact, ‘hold’) and Influence (stewardship, responsible ownership, shareholder impact), which can be combined differently.

She cites two urgent ‘real world’ aims, each providing investment opportunities, which will interest clients. First is in upscaling green finance into sustainable businesses and activities which facilitate change, Second is in driving a positive and fair transition, where shareholders influence will drive existing companies into changing their methods.

On financial performance, these funds exist to make money so, whilst non-ethical funds, typically including ‘old’ energy, may be doing slightly better now, the sustainable sector is a longer-term prospect

Research is critical in finding the right solutions for clients and there are practical tools  available to make this easier, one being Fund EcoMarket, designed by Julia herself. Here, advisers will find everything they need to know in order to begin the conversation with clients, including fund and sub-fund types, strategies, questionnaires and other tools.

TUESDAY 22 MARCH 2022

SESSION 1

Financial Exclusion: The Role of Firms and Advisors on Creating an Inclusive Sector

In this session the panellists – Anshul Bongirwar, EMEA Business Lead, Enterprise & Corporate Solutions, Moxtra; Elin Helander, Chief Scientific Officer, Dreams; Philip Kurtenbach, Global Head of Wealth Structured Products, HSBC and Bev Shah, Founder and CEO of City Hive – joined Simon Harrington, PIMFA’s Head of Public Affairs, to discuss what role firms and advisors play in building a sector which is truly inclusive for all and offering insights into how our industry can better cater for individuals in all walks of life.

No permanent address, bad credit rating, even no phone can all lead to exclusion, but lack of financial literacy, fear and lack of trust are all issues, too. Simplifying the ‘route to market’ for consumers and empowering them to understand the choices they can make is key.

The messaging used by the industry has traditionally been directed towards the wealthy, leaving a large segment of society unrepresented. Product and messaging is so skewed towards this minority sector that we don’t really know where to start but ESG & D&I are signposting ways to serve the community as a whole.

Wealth transfer means banks need to attract the younger markets and, equally, that they can’t use the same tactics to do so. They are used to working simply with products but now need to learn that they must work with the humans who might buy them, requiring a major shift in thinking. How we take individuality into consideration will become key to this.

Tech will also become a big future driver of financial relationships, introducing harder to reach low- income people to the investment space.

TUESDAY 22 MARCH 2022

SESSION 2

Understanding Younger, Self-directed Investor Behaviour

In his second session of the day, Simon Harrington introduced Rachel Rowlinson, Research Director at Britain Thinks, an insight and strategy consultancy, to unpick the behavioural and emotional drivers of young, self-directed investors towards the consumer investment market.

Coronavirus placed significant downward pressure on household finances. However, the last 2 years has also represented a period of growth for some. Emerging from the pandemic, there is potentially a new generation of savers able to use the services of PIMFA members, so understanding the behaviour that drives them is key.

Britain Thinks have been working with the FCA on Communications, Strategic Insight and Policy & Engagement, playing into the FCA’s work on strengthening the Financial Promotions regime for high net worth investments.

This audience is changing. Younger, more diverse people are being attracted into investing and she breaks this group down into gender, age, social grade and ethnicity by length of time investing. Basically, those investing for 10 years or more tend to be Caucasian males, over 50 and from higher income brackets, whereas those investing for under 3 years are much younger, more balanced from a gender perspective, are from lower income groups and are considerably more diverse ethnically.

New investment apps are reducing barriers to entry, producing more accessible, higher-risk, low- or no-fee models which are easy to use. Lower starting amounts and pension engagement through dashboards are proving particularly popular, along with a huge rise in financial investment ‘influencers’, drawing audiences in.

Pressure on young peoples financial futures; long term low interest rates, job market recession, property prices etc all making them want to make their money work as hard as possible for them, and cultural narratives ‘glamourising’ investing are producing a real shift in terms of how they talk about investing, putting it front of mind and making it more accessible.

However, they may need more support to help them develop ‘safer’ financial and investing strategies to ensure their financial futures and long-term engagement.

WEDNESDAY 23 MARCH 2022

SESSION 1

NFIB – An Introduction to the Work Carried Out by the Serious and Complex Cases Team

In this session, Alex Hides, an investment and pension fraud analyst from the National Fraud Intelligence Bureau (NFIB), provided an overview of the research and analysis work carried out by the serious and complex cases team, which deals with ‘high harm impact’ – high financial loss and high emotional impact – to a victim.

Large volumes of this type are being reported, of a highly sophisticated nature, displaying a great degree of knowledge on the part of the fraudsters and affecting a high number of individuals and organisations.

NFIB use banking and investment contacts to help identify money flows and, ultimately, potential suspects for further investigation. They are constantly ‘scanning the horizon’ for known or new fraud types. New methods of payment, such as cryptos, are also researched closely for prevention purposes.

When a trend or cause for concern becomes apparent, they create a profile for senior investigators to follow, with prevention advice for the public where necessary. One recent example of this is cloned company fraud.

They also monitor regulatory and legislative initiatives for their effectiveness on the fraud reporting landscape. For example, pension transfer regulations are being reviewed to ascertain their impact, with recommendations for change where necessary.

NFIB also produce Fraud Alerts – quick and snappy warnings about quickly-emerging fraud or cybercrime trends. To illustrating this, acting with overseas partners, they recently learned that investment fraudsters were targeting social media influencers specifically to get them to promote bogus schemes on their networks, thereby attracting a large number of victims, and warned the industry and the public.

He stressed that reporting fraud is critical. Regardless of whether you receive a response or not, reporting really does help to improve the intelligence picture. NFIB will be working on giving better feedback in the future but the message is, keep reporting.

As to the future outlook, something Alex is noticing is the changing demographic of the investment fraud victim. Ten years ago, a typical target would be semi-professional, over 50 or retired and the losses would be in the tens of thousands. With the rise of applications like social media, they’ve seen a much younger audience targeted with higher volumes of victims over a shorter period of time.

WEDNESDAY 23 MARCH 2022

SESSION 2

Action Fraud – A Guide to Reporting

In this session, Chris Buckingham from the City of London Police, who host both Action Fraud and the NFIB, took us on a practical tour of Action Fraud reporting, giving an insight on how to use the Action Fraud portal and make reports of scams and cybercrime, how to set up and receive fraud alerts, how to retrieve information from the dashboard and what happens to the data.

Action Fraud is the first port of call for the public, businesses and other entities to report fraud and Chris walked us through the different platforms used for the various types of crimes being reported. These are then analysed and investigated, or passed to other organisations, such as the NFIB, for further actions.

He talked us through how to set up Fraud Alerts, and how to use their dashboard to research the statistical information on types of fraud, their frequency and impact.

He then described what to expect in terms of action when reporting a fraud and what they do with the data, including a data-matching process to link reports from different parts of the country, creating a more accurate national picture, and how they can use it to create awareness campaigns and fraud alerts.

Action Fraud is not an enforcement agency in itself – reports are sent to NFIB for evaluation, then to the police if appropriate. With over 2000 calls and 250 webchats coming in per day, there is a huge amount of data to be analysed.

He then went on to illustrate how to stay safe from different types of fraud, drawing on information available on the Action Fraud website, including a case study on both the process and effect of Romance Fraud, as well as the role social media plays in investment fraud.

He closed by restating how valuable the reporting process is, highlighting their four-word mantra – Stop, Challenge, Protect, Report.

THURSDAY 24 MARCH 2022

SESSION 1

Technology Enabling Compliance

In this session, PIMFA’s Alex Roberts, Senior Policy Adviser, introduced Priscilla Gaudoin, Head of Client Regulation, and Matthew Bruce, Head of Product for Axiom offered attendees details on the current regulatory expectations, what the current risks are, how to implement appropriate mentoring, key steps and challenges as well as a demonstration of how Axiom’s technology can assist firms in their compliance journey.

Priscilla described the three overarching principles governing firms’ approach to risk management, as set out by the FCA, the PRA and the SYSC sourcebook, followed by the ‘three lines of defence’ model, all essentially about understanding what’s happening in a firm on a day-to-day basis. She also covered the five key elements of a risk review – Identify, Prioritise, Mitigate, Measure & Report, all with attendant overviews, covering topics such as internal processes, third party involvement, data gathering, risk ranking and the like.

Risk management is on 2 levels – collectively at board level and ownership on an individual basis for senior management who then report to the board. Implementing an appropriate monitoring process is essential, creating a continuous cycle where each individual item feeds into an holistic, manageable whole.

However, there are challenges. Compliance teams have competing priorities – staying up to date with UK regulation, identifying the key people providing information, data gathering and reporting.

Matthew then took over to describe Axiom’s history and give a detailed overview of their platform, which aims to offer assistance with the end-to-end compliance journey, both in terms of how and why it is designed and what it can offer to aid compliance generally.

THURSDAY 24 MARCH 2022

SESSION 2

Disability, Vulnerability & Financial Products – Are We Doing Enough to Meet Consumer Needs?

Vulnerability is a key topic for the FCA, as illustrated by their Finalised Guidance on Vulnerable Customers, published in February last year, and also our industry, as firms can soon expect the FCA to start formally supervising the treatment of vulnerable customers. This is an issue that will only grow, illustrated by the most recent Financial Lives survey which showed that 53% of UK adults – that’s a staggering 27.7.million people – are displaying characteristics of vulnerability, inevitably meaning that a proportion of all firms’ customers will drift in an out of vulnerability over a period of time.

The panel, including PIMFA’s Alex Roberts, Chris Fitch, Vulnerability Lead for the Money Advice Trust, Dan Holloway, Head of Administration and Finance Faculty of Linguistics, Philology and Phonetics, University of Oxford – Clarendon Press Institute, and Tim Farmer, Clinical Director and Co-Founder, Comentis, discussed various topics around vulnerability of customers including the role of advisers in identifying and assessing vulnerabilities, the role technology plays in the supporting vulnerable clients and tips to encourage disclosure.

CHRIS: Barriers to disclosure include attitudes to it, negative experiences of it and consequences deriving from it, but explaining the benefits of could ameliorate a lot of this. Looking at how to facilitate disclosure, a warm, human approach from staff, rather than a cold or robotic, is key to creating a supportive ‘disclosure environment’. The Barclays Bank ‘Money Worries’ web page is a good example of ‘sending good signals’ to customers. Something to think about

TIM: Advisers are not and shouldn’t expect to be experts but they should be able to identify potential flags and then signpost them to an appropriate professional. A person’s ability to make a decision –  or otherwise – is not necessarily an indication of their mental state or of vulnerability so the key thing for advisers to look for is the ability to understand, retain, weigh up and use relevant information as part of the decision-making process, then communicate their decision clearly. If a client lacks one or more of these, then this likely represents a ‘lack of capacity’, which should be flagged.

On using technology to help the assessment process, we’re at the start of the journey with lots more to come but the key is to use it to enhance the adviser’s toolkit, not to replace the client/adviser relationship.

FRIDAY 25 MARCH 2022

SESSION 1

Regulation Post-Brexit – What Does the Future Look Like?

PIMFA’s Senior Policy Adviser Maja Erceg was joined for this session by Bernardo Castel-Branco, Associate Director at Alpha FMC for his view on what negotiations are currently taking place and how those might impact the future regulatory landscape of the UK’s financial services industry.

The Temporary Transitional Power (TTP), which ends on 31^st March this year, and the Temporary Permissions Regime existed to give time for firms to transition to a post-Brexit environment and become compliant with the on-shored European regulations, avoiding a ‘cliff-edge’ scenario.

It also enabled EU firms to continue to operate in the UK without authorisation, or in a branch capacity, during the same period, via passporting and other arrangements. In this respect, the EU did not reciprocate. Post 31^st March, EU firms operating in the UK will have to comply with UK regulation and should be preparing for this.

Whilst he believes that the coming changes are largely cosmetic in the UK, they do mark the final point of separation for UK Financial Services from Europe and will also herald a strengthening in tone from the FCA.

Those UK firms employing reverse solicitation to continue trade in Europe will also face significant changes from April. The EU & UK are now amending legislation separately as, whilst the EU is mostly updating existing regulation, the UK is enacting more strategic reforms, meaning that divergence will occur to a greater degree and more quickly. Listening to the changes coming from the Treasury and the FCA over the last year, it appears that equivalence is no longer an aim, providing a more competitive environment for firms operating in the UK.

Examples of changes already made are in the SPACs rules and the Listing Regime, but there are more on the way, such as changes to MiFID II, rules governing FX and Crypto and divergences in the ESG space.

The UK is also taking the opportunity to seek equivalence with other markets, such as Switzerland and Singapore, so divergence will continue as a hot topic for the next few years.

FRIDAY 25 MARCH 2022

SESSION 2

Closing Keynote – Labour’s Priorities for the City and Financial Services

For the final session of V Fest 2022, PIMFA’s Tim Fassam, Director of Government Relations and Policy, introduced Tulip Siddiq MP, recently appointed as the Shadow Economic Secretary to the Treasury to speak about the Labour Party’s vision for the City.

UK financial services are central to the British economy and a major driver of growth, contributing £132 billion to the economy in 2019. They have also been our most successful export for decades so, following years of underinvestment, poor growth and low productivity, supporting our sector will be fundamental to our economic recovery following the pandemic and the supply shocks caused by the Ukraine crisis.

Stability is critical and one serious issue threatening this is the post-Brexit regulatory environment. Whilst labour wouldn’t reopen negotiations, Europe remains an important market. In 2019, almost 40% of FS exports went to the EU. Despite this, Tulip feels that financial services were ‘hung out to dry’ in the Brexit negotiations. If in power, Labour would build on mutual recognition for our service sectors but, if we are to build a strong industry now we’re outside the EU, the sector has to be ready for the challenges of the future.

FinTech can help, and promoting financial education, along with a rethink on financial resilience, inclusion and wellbeing issues are also priorities.

Over a third of all adults have less than £1000 in savings, and one in ten – about 5.6 million people – are currently dependant on high-cost loans to make ends meet, so Labour would ensure that new sectors like buy now, pay later products and crypto companies are properly regulated. They would also work closely with the industry to ensure wider access to high-quality advice and guidance so people can make well-informed choices on how to invest their savings or manage their debt.

Also high on her list of priorities is money laundering from Russia and elsewhere, which undermines our security and damages our reputation. Labour supports the current sanctions regime imposed on Russia and welcomes the progress made in cutting their banks off from Swift but doesn’t believe these go far enough. Whilst supporting the recent Economic Crime Bill, they tabled amendments to this bill requiring government to take quicker and tougher action against illicit finance and urgently bring forward reforms to Companies House. These amendments were voted down.

But perhaps the biggest challenge facing the UK is the transition to a green economy. Labour has committed to £28 billion of capital investment every year until 2030 to support the green transition but the financial sector also has a vital role to play in attracting green investment. Labour is calling for financial institutions and FTSE 100 companies to provide credible climate transition plans by 2023.

Also important is the changing attitude of retail investors, conscious of the carbon footprint of their investments. Labour wants to ensure that consumers are able to access the information they need to make well-informed green investments.

Growth in the financial sector has not been felt equally across the country so Labour want to see proper action on levelling up. In power, they would work closely with the sector to address regional inequalities and Tulip believes that the FinTech sector could play an important role in this.