Regulation
Consumer Duty
The Financial Conduct Authority (FCA) timeline for publishing Consumer Duty final rules is now Q3 2022 (previously by 31st July), noted on the FCA website here. Money Marketing here has a focus piece on What the Consumer Duty means for Product Governance. There is a clear intention for the new consumer duty to set an explicit and far broader higher standard for firms.
Oversight of distributors is likely to be a big focus of the Consumer Duty. FBC members can watch our most recent discussion on the ramifications for fund board directors here. Look out for much more on this topic from FBC in the coming weeks!
Non-EU delegation risks
Derville Rowland, director-general of financial conduct at the Central Bank of Ireland (CBI) says proposed changes in the Ucits and AIFMD review are too narrow in scope. Reported in Ignites Europe, here, he says “there is a legitimate basis to think that there may be too much focus on third-country delegation” in the review into Ucits rules and the Alternative Investment Fund Managers Directive.
Competitive pressures
John Kay’s, author of ‘Other People’s Money’, article in the Financial Times (FT) here looks at why competitiveness should not become a goal for the FCA, asserting that ‘A regulatory race to the bottom harms everyone except those who have something to keep from public scrutiny.’
ESG
Stateside rules
The US Securities and Exchange Commission (SEC) has proposed new disclosure and reporting requirements that will mandate a common disclosure framework for demonstrating “concrete and specific measures taken to address ESG goals and portfolio allocation.” The new rules aim to tackle greenwashing and ensure companies provide investors with consistent, comparable, and reliable information with regards to ESG funds. One of the many reports on this is in Professional Adviser here. And this article in Forbes, here, unpacking the SFDR side of things too, is worth a read. The proposed rules are here and SEC press release on the same is here.
Just two days before this announcement, the SEC disclosed a first of its kind $1.5m settlement with BNY Mellon investment adviser division over misstatements and omissions in ESG statements. In the FT here and SEC press statement here.
Net Zero miss
Campaigners at climate change group, Sunrise Project, called out Vanguard, the world’s second largest asset manager, saying its climate plan ‘pales in comparison’ to other asset managers. Ignites Europe reports here. Following the release of Vanguard’s “initial commitment” as part of its membership of the Net Zero Asset Managers initiative, announcing that less than 5% of its total assets are currently in line with net-zero emissions by 2050, the Sunrise Project says it has not committed to a specific target, does not insist that investee companies’ net-zero commitments be science based and omits its passive funds, which represent the bulk of its business. On the flipside, in the FT here, Vanguard Chief Executive, Tim Buckley, voices that the group engages with companies on climate change, while maintaining its duty to maximise returns for clients.
Research
Just under half (45 per cent) of asset managers, pension funds and insurers still do not have ESG investment policies in place, according to new research from Clearwater Analytics (CWAN). A poll of over 190 institutional investment firms representing more than USD12 trillion in assets under management (AUM) found that a third of those without a clear strategy point the finger at the lack of available and credible data to evaluate investments on an ESG basis, compared with just 16.5 per cent who blamed lower returns. Reported on in Institutional Asset Manager here.
Transparency
In the FT here, comment from PGIM, Pimco, iShares and Blackrock on disclaimers on ‘climate-friendly’ products, including that clients should be warned that explicitly ‘green’ investments can have lower returns.
And further, in FN London here. Alex Friedman, Josh Green, and Lorraine Spradley Wilson, respectively the CEO, chief operating officer, and chief impact officer of Novata report on running a green finance company and ‘why Elon Musk is right about ESG’.
For FBC corporate members who want to keep up to date following the FCA’s publication of the Sustainability Disclosure Requirements (SDR) this summer, registration is now open for our event taking place on 5 September 2022, with Mark Manning, Technical Specialist, Sustainable Finance and Stewardship at the FCA, Sandra Carlisle, Head of Sustainability at Jupiter, and iNED Julie Patterson. For further details and registration, click here.
People & Progress
Client focus
State Street, leader in Luxembourg’s asset services market, is undergoing a transformation. Investment Officer, here, reports on the upcoming integration of Brown Brothers Harriman, data management, ESG requirements, digital asset management and the rollout of its upgraded Alpha business platform being top of mind for country head Ricardo Lamanna. “We create an environment where we progressively shift from being an operational organisation in Luxembourg to being a client-facing organisation.”.
People’s Pension trustee
The People’s Pension has appointed pensions and investment specialist, and FBC Advisory Council member, David Butcher to its trustee board. He will join six existing trustees with oversight of the master trust, which now has almost £18bn assets under management and is one of the largest trusts in the UK in terms of number of members. Reported in Corporate Adviser here.
In case you’ve not caught it yet, in FBC’s new fund board effectiveness podcast series, David Butcher speaks to FBC Managing Director, Catherine Battershill, about the importance of mindfulness and self-awareness in the fund board room. Listen to the podcast here.
Several of the news outlet cited in this blog require registration or subscription. Also, FBC takes no responsibility for the accuracy or quality of the news in the links provided above, and nor are the views and comments representative of FBC or its members, unless expressly stated. Content stored on the FBC portal is freely accessible for FBC members.
