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October Investment Management Update

October Investment Management Update

  • United Kingdom
  • Financial institutions - Asset managers and funds


Download the full October Investment Management update.

What were September's highlights?

European Parliament rejects PRIIPs RTS

On 14 September the European Parliament voted in plenary session, by a vote of 602 to 4 (12 abstaining), to approve a resolution objecting to the European Commission’s proposed Delegated Regulation supplementing the Regulation on Key Information Documents (PRIIPs KID Regulation).  The proposed Delegated Regulation contains regulatory technical standards (PRIIPs RTS) on the presentation, content, review and revision of KIDs.

The European Parliament has sustained the 1 September 2016 vote by the European Parliament Economic and Monetary Affairs Committee (ECON) to unanimously approve the motion rejecting the PRIIPs RTS. The ECON Committee rejected the RTS, describing them as “misleading” and “flawed.” 

The Parliament explains that the Commission will now have to propose new RTS for implementing the PRIIPs KID Regulation, which is due to apply from 31 December 2016.

See our briefing on the European Parliament's rejection of PRIIPs RTS for more information.

HM Treasury Consultation Paper: Amending the definition of financial advice

On 20 September 2016, HM Treasury published a consultation paper on 'Amending the definition of financial advice.'

HM Treasury and the FCA published the final report on the financial advice market review (FAMR) in March 2016 following the launch of FAMR in August 2015. One of the recommendations of the final report was that the government should consult on amending the definition of regulated advice in article 53 of the RAO, to bring it in line with the definition set out in the Markets in Financial Instruments Directive (MiFID). The proposed change would mean that only advice that makes a personal recommendation would be regulated.

This amendment would provide firms with greater certainty by:

  • creating a single definition for regulated advice based upon the MiFID definition of a personal recommendation
  • removing some of the regulatory barriers constraining the content of current guidance services

The consultation paper sets out the government’s proposed approach in addition to the amended text for article 53 which is set out in part 8 of the consultation paper.  It is also worth noting that in response to the FAMR, the FCA plans to produce new guidance to support firms offering services that help consumers to make their own investment decisions without a personal recommendation. This guidance will set out the FCA’s view on what providers of guidance services need to do in order to treat customers fairly. This will complement the change to the definition of advice.

The consultation closes on 15 November 2016.

Duty of Responsibility for Senior Managers

On 28 September 2016, the FCA published a consultation paper (CP16/26) to give guidance on how it will enforce the duty of responsibility under the senior managers regime (SMR). 

On 4 May 2016, Parliament passed the Bank of England and Financial Services Act 2016, which introduced the duty of responsibility. The duty of responsibility came into force on 10 May 2016. It currently applies to persons performing senior management functions at UK banks, building societies, credit unions, PRA-designated investment firms, and incoming branches of overseas firms.  However, from 2018, the SMR will be extended to all regulated financial services firms.

The FCA previously consulted on guidance on how it would enforce the presumption of responsibility, which was subsequently replaced by the duty of responsibility.  In developing the proposed guidance, the FCA has sought to address relevant responses to those consultations, and it summarises, at pages 9 and 10 of CP16/26, its position on those responses.

See our briefing on the Duty of Responsibility for Senior Managers for more information.

FCA Published Third MiFID II Consultation Paper

On 29 September 2016, the FCA published its third consultation paper (CP16/29) on the UK implementation of the MiFID II Directive.  Comments on CP16/29 are requested by 4 January 2017, with the exception of proposals in chapter 16 relating to the FCA's Supervision manual (SUP), authorisation and approved persons, for which the deadline is 31 October 2016.

The consultation paper is split into two parts:

  • Part 1 deals with conduct of business issues
  • Part 2 deals with other matters, covering a range of issues not covered by the FCA’s previous two consultation papers

The FCA points out that that implementation of MiFID II also requires changes to UK legislation and PRA rules. It clarifies that the proposals in CP16/29 are based on the draft statutory instruments that HM Treasury consulted on in March 2016 which may be subject to change. The PRA will publish in due course a policy statement following on from its proposals relating to passporting and algorithmic trading set out in its March 2016 consultation (CP9/16).

In addition, the FCA will continue to analyse all consequential changes that need to be made to the Handbook, including the specialist regimes. It believes this will lead to a further consultation later in 2016.

The FCA is expected to publish a policy statement covering all aspects of MiFID II implementation in the first half of 2017. 

For more information contact

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