HMT and FCA launch Financial Advice Market Review

HM Treasury and the FCA launched a review of the UK market in retail financial advice on 3 August 2015, to be led by HM Treasury and the FCA and will include an expert advisory panel of 12 to 15 senior figures representing financial services providers, financial advisors and consumer representatives.

The objectives of the review are to examine:

• The advice gap for those people who want to work hard, do the right thing and get on in life but do not have significant wealth.
• The regulatory or other barriers firms may face in giving advice and how to overcome them.
• How to give firms the regulatory clarity and create the right environment for them to innovate and grow.
• The opportunities and challenges presented by new and emerging technologies to provide cost effective, efficient and user friendly advice services.
• How to encourage a healthy demand side for financial advice, including addressing barriers which put consumers off seeking advice.

The review will gather evidence over the summer with a view to producing a consultation paper in autumn 2015. The consultation exercise will close by end 2015 with a view to producing proposals ahead of Budget 2016.

Read: "Major new review to radically improve access to financial advice launched".

Read: "Statement on the Financial Advice Market Review".

Tax Proposals in Summer 2015 Budget to Affect UK Asset Managers

The UK Summer Budget was announced on 8 July 2015, and included a number of unexpected tax proposals affecting the UK asset management industry, including proposed changes to the taxation of carried interest and performance related returns. 

Read Dechert update: "The UK Summer Budget - Private Equity and Investment Management". 

FCA Publishes Findings of Financial Benchmarks Review

The FCA published a thematic review report (TR15/11) on 29 July 2015, into the findings of its review of firms' oversight and controls relating to financial benchmarks carried out between August 2014 and June 2015.

The FCA had sought to assess the extent to which firms had responded to historic misconduct relating to benchmarks and failings highlighted by benchmark enforcement cases. It also wanted to understand whether firms had implemented appropriate oversight and controls to manage the risks posed by their involvement in benchmark activities.

The FCA found that all firms reviewed had made changes to their approach to benchmark activities, although there were a number of areas where further action is needed to manage the risks of the benchmark activities appropriately. The application of lessons learned from the past had been uneven across the industry and often lacked the urgency required given the severity of recent failings.

The report sets out key messages for firms and provides examples of good and poor practice the FCA saw at the sample of banks and broking firms it assessed.

Read: "TR15/11: Financial Benchmarks: Thematic Review of Oversight and Controls".

English and Scottish Limited Partnerships Permitted by Jersey to Become Jersey AIFs

A new regulation came into force in Jersey on 14 July 2015, which permits English and Scottish limited partnerships to elect, subject to certain conditions, to be regulated in Jersey as Jersey AIFs. Such limited partnerships may be treated as "non-EU AIFs" for the purposes of the AIFMD by virtue of being authorised in Jersey by the Jersey Financial Services Commission.

To be eligible for the election, the relevant limited partnership must:

• Be registered in England or Scotland under the Limited Partnerships Act 1907 of the United Kingdom.
• Have a governing body which is:
  • a Jersey company,
  • a limited partnership, an incorporated limited partnership or a separate limited partnership whose general partner is a Jersey company, or
  • a limited liability partnership at least one of the partners of which is a Jersey company.
     
• Not have a registered office, head office or principal place of business outside Jersey.
• Keep a register of limited partners or a duplicate copy of the register at the registered office or head office of the governing body in Jersey.
   

Read "Alternative Investment Funds (Amendment of Regulations No. 2) Order 2015". 

Separately, the FCA is consulting (in CP15/8) on proposed guidance to be included in the Investment Funds sourcebook (FUND) under which an unauthorised AIF in the form of an English limited partnership, which does not have a “registered office”, should use its principal place of business to determine the place where the AIF is established, with the consequence that an English limited partnership with a principal place of business in Jersey would be considered a non-EEA AIF. The position of Scottish limited partnerships is not specifically considered in this draft guidance. The consultation closed in May 2015 but no final rules have yet been published.

Read "CP15/8: Quarterly Consultation Paper No. 8".