Some positive FCA feedback on conflicts of interest for Wealth Management firms

In welcome news for the industry, the FCA in late November 2014 expressed pleasure in reporting generally positive findings from its thematic review assessing whether wealth management firms and private banks identify and manage conflicts of interest that might arise when providing investment products manufactured within the same group/firm (in-house products – “IHPs”). Continue reading

UK FCA proposes temporary product intervention rules for CoCos

The Financial Conduct Authority (FCA) has announced that it is proposing to use its temporary product intervention powers for the first time to restrict firms from distributing contingent convertible instruments (CoCos) to the mass retail market for a 12 month period from 1 October 2014.  The FCA is not formally consulting on these proposals, but would nevertheless welcome comments, particularly those received before the temporary rules come into force on 1 October 2014. Continue reading

UK: Retail product distribution payments under the FCA spotlight – finalised guidance on inducements and conflicts of interest

The FCA has set an uncompromising compliance standard for what it sees as unacceptable payments from product providers to advisors in the retail investments sector; and laid down a marker for similar payments in the mortgages, protection and other ICOBS sectors. Firms affected must review their distribution/services agreements and other payment arrangements by 16 April 2014. Continue reading

ASIC releases another report on retail structured products

ASIC has released Report 377 “Review of advice on retail structured products”, which reports in relation to a sample of personal advice given to retail clients in relation to structured products.  This report was foreshadowed in and follows ASIC’s May 2013 Report 340 ‘Capital protected’ and ‘capital guaranteed’ retail structured products.  ASIC has foreshadowed further surveillance, with a view to enforcement action where merited. To access our briefing, click here.

Present Company Excepted? The Modern Approach to Piercing the Corporate Veil

At the recent briefing “Present Company Excepted? The Modern Approach to Piercing the Corporate Veil”, Gareth Thomas (Head of Commercial Litigation, Hong Kong) and Richard Norridge (Senior Associate, specialising in fraud, trusts and private wealth) discussed the issue of piercing the corporate veil in light of the UK Supreme Court case of Prest v Petrodel Resources Limited.  To access our briefing, click here.

Further enforcement action by UK FCA in relation to suitability issues in wealth management

The UK’s Financial Conduct Authority (FCA) has imposed a £1,802,200 fine on AXA Wealth Services Ltd (AXA) for failing to ensure the investment advice given to its customers was suitable, and putting customers at risk of buying unsuitable products.  The case is interesting not just because it provides some elaboration on existing guidance on suitability, but also because the FCA examined the adequacy of controls over sales incentives to ensure that advisers did not make unsuitable recommendations or seek to sell unwanted products.

Interestingly, the FCA highlights the fact that the investment funds underlying the products recommended to customers were predominantly managed by members of the AXA Group, although the FCA does not directly criticise the bancassurance model, nor is there any overt suggestion that potential conflicts of interest were not adequately managed (other than the inadequacy of controls over sales incentives).  The fine is however based on a percentage of AXA’s total revenue from sales of investment products during the relevant period. Continue reading

New Hong Kong Trust Law to come into effect on 1 December 2013

On 17 July 2013, the Hong Kong Legislative Council passed the Trust Law (Amendment) Bill 2013, which will come into operation on 1 December 2013.  The amendments aim to modernise Hong Kong trust law, and are likely to be welcomed by settlors and to enhance Hong Kong’s status as an international asset management centre.  For more details, click here.

UK: FCA to exclude Venture Capital Trusts from restrictions on promotion of UCIS?

The Economic Secretary to the Treasury has confirmed that the Financial Conduct Authority (FCA) is working towards publishing its final policy statement on the results of last August’s consultation on proposed restrictions to the marketing of unregulated collective investment schemes (UCIS) and close substitutes in June 2013. Continue reading

UK: FSA statement on CP12/19: restrictions on the retail distribution of UCIS and close substitutes

The FCA has published an update on its approach to last August’s consultation on proposed restrictions to the marketing of unregulated collective investment schemes (UCIS) and close substitutes.  A range of concerns had been expressed about the original proposals, including about their potential scope, and a lack of clarity around the definition of “non-mainstream pooled investments” .  Following discussions with stakeholders, the FCA has concluded that a number of important issues require further consideration, particularly given the complexity of the area.   The FCA will continue to work towards publishing its final policy statement as soon as possible this year and will take account of the later publication date when setting the implementation date for any new rules.

Australia: ASIC releases reports on capital protected products

ASIC has released two reports on ‘capital protected’ and ‘capital guaranteed’ investment products: a report that ASIC describes as a ‘health check’ on the capital protected and capital guaranteed products market (Report 340); and a research report into retail investors’ understanding of those products (Report 341).  These reports echo, and are a timely reminder of, a number of the themes from ASIC’s 2010 “Review of disclosure for capital protected products and retail structured or derivative products”, and confirm that capital protected and capital guaranteed structured products remain on ASIC’s radar.  Structured product issuers and advisers should familiarise themselves with these reports, and revisit their use of ‘protected’ or ‘guaranteed’ labels, particularly where the protection or guarantee is subject to conditions.   To read our fuller briefing, click here.