Investment Forum Regulatory Update Round 2 - 2018

Learning Objectives Gain an understanding of the forthcoming Senior Managers & Certification Regime (SM&CR) and the implications to your firm Gain an awareness of the Insurance Distribution Directive (IDD) and the practical implications of this regulation Gain an understanding of the latest regulatory developments and changes made to the SimplyBiz website as a result 

Senior Managers and Certification Regime

Purpose of the SM&CR The regime aims to: - encourage staff to take personal responsibility for their actions - improve conduct at all levels - make sure firms and staff clearly understand and can demonstrate who does what We were told by FCA the rules for smaller firms would be ‘proportionate’

SM&CR DAY Pre SM&CR 9th December 2019 Post SM&CR

Pre SM&CR Day All firms will be ‘mapped across’ Firms will need to ensure the right people are registered to the right roles Only senior managers will be registered with the FCA

Senior Managers SMF1 – Chief Executive SMF3 – Executive Director SMF9 – Chair (non-executive director) SMF16 – Compliance Oversight SMF17 – Money Laundering Reporting Officer SMF27 – Partner REMEMBER Ensure the right people are in the right roles before 9th December 2019

Identify Certified Persons Applies to individuals who are not senior managers It is designed for individuals whose job means they can have a big impact on customers or the firm It includes functions that require a qualification It also includes people who are responsible for other certified persons Investment advisers Mortgage advisers Pension transfer specialist Office managers? Supervisors? Paraplanners?  

Conduct Rules Conduct rules will apply to all SMs and CPs Training must be delivered for each role before date of implementation These are similar to Approved Persons regime but with expected standards quoted

HAPPY SM&CR DAY! 9th December 2019 Firms will adopt the ‘core’ regime This will allocate responsibilities and duties to Senior Managers and Certified Persons

Senior Managers Each senior manager will be allocated: Statement of Responsibilities This will be a template produced the FCA Prescribed Responsibilities Similar to current Approved Persons regime Duty of Responsibilities To prevent or report breaches

Up to and beyond

SM&CR – General Requirements New Conduct Rules will apply to all staff Senior managers Certified persons All other relevant staff Training on conduct rules must be given setting out responsibilities for each role Annual assessment of Fitness & Properness Notify FCA of any disciplinary action

Joiners / Leavers

Senior Managers – New Regime All senior managers need to be approved by FCA On application a criminal records check must be submitted The same applies to internal transfers! Establish structure before SM&CR!

Regulatory References SMs & CPs Regulatory References There will be a standard template for all firms Disclosure of information over previous 6 years Must include any disciplinary action Review references in light of new action arising

SM&CR – The Outcome SM&CR will help shape the culture, standards and policies of firms as a whole and promote positive behaviours that reduce harm

Register of Advisers The FS Register will no longer show customer functions i.e. investment advisers Consultation proposing to introduce a new public directory This is proposed to go live on 9 December 2020

The Directory Firms will be responsible for keeping the information up to date using CONNECT The FCA will not edit the information that firms submit before publication This will include those providing a qualified customer facing regulated service. This will include mortgage advisers £250 admin fee for late or inaccurate data

SM&CR – What Next The SimplyBiz Group will provide a detailed guide on this new regime SimplyBiz Group will provide you with templates for each of these processes SimplyBiz will provide a service to demonstrate your compliance with this regime Workshops???

Would you be interested in a SM&CR workshop? This slide is a ppvote question Yes No Yes No

MiFID II & The IDD

II

MiFID & IDD business? Shares Units in collective investment schemes Investment trusts Exchange traded funds Investment bonds Protection with an investment element

Application of MiFID II & IDD Some changes apply to MiFID business only Some change apply to IDD business only Others apply to both MiFID and IDD Some apply to all investments i.e. MiFID, IDD, pensions, etc.

Client Agreements Client agreements have been updated to reflect MiFID & IDD: Confirms you only accept written instructions Spells out disclosure requirements of the IDD Removal of Data Protection for GDPR

Suitability Reports Change to the definition of advice A personal recommendation is to: Buy, Sell, or Hold Reports must be issued before conclusion of the transaction / contract

Suitability Reviews Where the firm carries out a review of suitability it must be carried out at least annually for MiFID and IDD business Does not apply to non-MiFID/IDD business! A suitability report must always be provided

Disclosure – MiFID & IDD This brings in a new regime for disclosure of costs and charges All costs and charges have to be aggregated This is designed to ensure clients understand the purchase cost and on-going cumulative effect on the return

Disclosure of charges Disclosure does not apply to non-MiFID/IDD products For MiFID & IDD disclosure must be made: Ex-ante Ex-post Ex-post is: 3rd January 2019 for MiFID 1st October 2019 for IDD

Discretionary Portfolio Managers Where a client’s investment suffers a 10% depreciation they must be notified Only applies to MiFID investments Check the agreement and any addendums where you are the client of the DFM

Independence Independence is to consider a range of products but to include structured deposits and cash This is not all retail investment products CPD should cover all products CPD will need to include 15 hours of IDD products

SimplyBiz Support

Website New Documents Updated Documents Deleted A recruitment guide A guide to appointing an introducer Updated Documents File review standards Compliance plan Disaster recovery plan Deleted Enhanced suitability questionnaire

Learning Outcomes Gain an understanding of the forthcoming Senior Managers & Certification Regime (SM&CR) and the implications to your firm Gain an awareness of the Insurance Distribution Directive (IDD) and the practical implications of this regulation Gain an understanding of the latest regulatory developments and changes made to the SimplyBiz website as a result