With yet another eventful year for M&A now behind us, what does 2025 hold for M&A activity in wealth and personal finance? In this free 60-minute webinar, we ask sellers, acquirers, advisory firms and M&A experts their views and opinions on:
30 January 2025
PIMFA calls for an ambitious and assertive approach in modernising the redress system
The trade association urges the FCA to reconsider the role of FOS, and explore consolidating the regulatory regime for CMCs
PIMFA, the trade association for wealth management, investment services and the financial advice and planning industry, has called on the Financial Conduct Authority (FCA) to be ambitious in its proposals to modernise the redress system and look beyond the iterative proposals they have put forward in their recent discussion paper on modernising the redress system. In its response to the paper, PIMFA has argued that whilst the headline proposal of ‘defining a mass redress event’ would be a welcome intervention, many of the concrete proposals set out within the paper would have mixed results and would prove minor in their nature.
Instead, PIMFA has suggested reforms which would both improve the current approach to mass redress events as well as strengthen the regulator’s oversight of the complaints process.
Where these mass redress events occur, PIMFA believes that there is scope in resetting the boundaries around how the Financial Ombudsman Service (FOS) operates and, crucially, about what it does not do, which would likely significantly reduce the operational pressure on the FOS.
Consequently, PIMFA believes that in the case of mass redress events, and where firm-led solutions have been agreed in dialogue with the FCA and/or a Skilled Person, the FOS should only follow on from the agreed redress programme outcome – acting as a final backstop to consider if the programme parameters have not been fulfilled where the customer remains unhappy with the outcome.
Beyond the scope of mass redress events, the trade body also outlined how the FCA and government should consider consolidating the disparate regulatory regimes governing CMCs to overcome that the current regulatory arbitrage with the two primary regulatory regimes. This would result in more consistent experiences for consumers and better regulation of the CMC sector more generally. PIMFA would favour the FCA having powers over all financial services focused CMCs rather than the current regime which provides for some Solicitors Regulation Authority (SRA) regulated ‘professional representatives to bring forward financial services claims.
Simon Harrington, Head of Public Affairs at PIMFA, commented: “Ensuring that we have a fit for purpose redress system when things go wrong on a major scale is an important step in ensuring that consumers who have been let down receive a fair outcome. Whilst we think that it is right that the FCA have identified some areas for reform – specifically the need to identify when a mass redress event has occurred, we also believe there is scope for them to be more ambitious and assertive in their proposals.”
“We strongly believe that the FCA should give consideration to the role of the FOS and how it currently involves itself in mass redress events, and where they have worked closely with firms and/or a Skilled Person to identify and resolve any failings, the FOS should be out of scope, giving firms the breathing space they need to meet their redress obligations.
Only once a consumer has received and understood an offer of redress, do we believe that the FOS should be in scope to ensure the process is as efficient as possible and that consumers who have been let down do not inadvertently find themselves further delayed by process and bureaucracy.”
“We would also strongly urge the FCA to look beyond the crystallisation of mass redress events and consider the regulatory regime which governs complaints more broadly. To this end, we strongly believe that there is scope for the FCA, in consultation with government, to consolidate the regulatory regimes which currently governs the CMC sector. It is vital that there is consistency of consumer experience, and most pressingly, consistency of standards across the board and this can only be achieved through a consolidated regulatory regime.”
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NOTES TO EDITORS
About PIMFA – the Personal Investment Management & Financial Advice Association
Contact
For further information on this release or other press matters please contact:
Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk,
+44 (0)20 7011 9869 / +44 (0)7979 493225.
By employing PEPs and sanctions screening tools, wealth management firms can identify and avoid high-risk individuals and entities. Integrating AML practices ensures a transparent operating environment, fostering client confidence and preserving the firm’s integrity.
Achieving and Maintaining Regulatory Compliance
Regulatory expectations in wealth management are stringent, with a strong emphasis on preventing money laundering and financial crime. The FCA has highlighted its intrusive supervisory approach, with unannounced visits and increased scrutiny of firms’ compliance measures. Non-compliance could lead to severe penalties and legal ramifications.
PEPs and sanctions screening solutions enable firms to meet these regulatory requirements by flagging politically exposed and sanctioned individuals. Robust AML screening, ensures adherence to regulatory frameworks, helping firms avoid costly penalties and demonstrating their commitment to ethical operations.
Mitigating Risk
Due diligence is a cornerstone of wealth management, where the stakes are high, and risks must be meticulously managed. PEPs and sanctions screening solutions empower firms to conduct thorough background checks, uncovering potential risks associated with politically exposed clients or blacklisted entities. By proactively addressing risks, wealth management businesses can protect their clients, assets, and reputation.
Driving Operational Efficiency
Manual AML compliance processes can hinder the efficiency of operations, causing frustrating delays when onboarding high-value clients and increasing operational costs. Automated PEPs and sanctions screening, powered by advanced AI, accelerates onboarding, ensuring real-time due diligence with accurate results.
Screening tools that incorporate AI reduce the burden on compliance teams by catching sophisticated AI-fraud and reducing instances of inaccurate false-positive results. When AML compliance with regulatory standards is automated and accurate, this frees wealth managers and advisors to focus on client engagement and strategic growth.
Strengthening Global Collaboration and Information Sharing
The fight against financial crime transcends borders, requiring cooperation across industries and jurisdictions. For wealth management firms operating internationally or with diverse client bases, access to up-to-date information on PEPs and sanctioned entities is critical.
Leveraging shared databases and collaborative networks enhances the accuracy of screening processes, aligning firms with global efforts to combat financial crime. This proactive approach reinforces the firm’s standing as a responsible participant in the financial ecosystem and supports long-term sector resilience.
Conclusion: A Call to Action for Wealth Management Firms
Wealth management companies operate in a high-risk, high-trust environment where client relationships and compliance are paramount. Ignoring the risks posed by money laundering, terrorist financing, and other financial crimes is not an option. By prioritising PEPs and sanctions screening alongside AML compliance and electronic identity verification, wealth management firms can safeguard their reputation, mitigate risks, and improve operational efficiency.
Adopting these measures is not only a regulatory requirement but also a step towards building a more transparent, secure, and ethical financial future. Firms that embrace these practices will be better positioned to navigate the complexities of the financial landscape, delivering exceptional outcomes for their clients and stakeholders.
Key Takeaways
If you would like to discuss how digital identity verification and AML screening can benefit your wealth management practice, please feel free to email me: alex@id-pal.com or connect with me on LinkedIn here.
Alexander Blayney, Head of Strategic Partnerships and Enterprise Sales, id-pal
O-IM’s Investment Team will reflect on their three-year track record, discuss the key drivers behind the performance, and share their outlook for the months ahead.
For more information contact john.muir@o-im.co.uk, 07821 535587 or click here.
Disruptions to critical, or important business services can have far-reaching consequences not just for the financial services, but national economies and consumers.
In this event, Ruleguard provides a snapshot of the UK’s operational resilience framework, outlines key requirements of the EU’s Digital Operational Resilience Act (DORA) and how operational resilience aids transparency and builds trust with consumers.
For further information click here.
On 26 October 2024, a new section of the Equality Act 2010 came into force, placing a new duty on firms to take reasonable steps to prevent the harassment of a sexual nature of workers in the course of their employment.
In this FREE 60-minute webinar, employment law experts from DAC Beachcroft LLP will explore what the newly established legal obligation is, means in practice and what steps should be taken to avoid falling foul of the new law as well as for employers regarding the prevention of sexual harassment in the workplace taking a deep-dive look into how PIMFA member firms, can simply and effectively create a culture of accountability and openness, where employees feel empowered to report incidents of any form of harassment without fear of retaliation.
Time has been set aside on the webinar to ask our experts how these changes impact your firm’s responsibilities and employee rights, showcasing how leading firms are building a safer and more inclusive work environment.
Key points discussed:
• What is the new duty?
• Key responsibilities of employers
• Recognising, addressing, and preventing harassment
• Reasonable steps
• Strategies for encouraging bystander intervention and promoting respectful workplace behaviour.
• Consequences of non-compliance
• Can we expect further change?
When I left my first city job back in 2006, my colleagues gifted me an iPod. At the time, I didn’t fully grasp its value and left it boxed for over a year. Eventually, I gave it a go, and it completely transformed the way I experienced music. My CD collection, once a source of pride, was relegated to memorabilia, later encased in a friend’s clear flooring—a quirky reminder of the shift in how music was consumed.
This experience feels oddly parallel to where we stand in WealthTech today. The industry is brimming with innovative technology, but its value remains underappreciated or misused. Much like my pre-iPod music world, wealth management is struggling with outdated systems and the challenge of integrating new tools into a legacy infrastructure. Without a unifying leap forward—a “Bluetooth moment”—we risk limiting the full potential of emerging advancements.
The Industry’s Tipping Point
Nearly half of IFAs (Independent Financial Advisers) are expected to retire in the next five years. This inevitable shift is fuelling a wave of consolidation and represents a golden opportunity for the next generation of business leaders to reshape the status quo. Digital transformation is no longer optional; it’s essential. However, transformation doesn’t have to mean adopting fully automated robo-advisors. Instead, it’s about harnessing technology to improve efficiency and refocus on what truly matters: building relationships and delivering value.
A significant roadblock is integration—or the lack thereof. Across the supply chain, too much time is spent transferring data manually between systems. In few other sectors do key personnel waste so much time wrestling with outdated processes. My iPod moment came when a colleague helped me load my entire music library. Suddenly, I had access to a vast collection, streamlined for every context: jogging, reminiscing, or hosting a party. It revolutionised my relationship with music, much like better integration could redefine wealth management workflows.
Streaming, But Not Yet Streaming-Ready
In a previous blog, I touched on the need for streaming-style services in wealth management: low-cost, high-accessibility, and client-centric solutions. But the reality is that many businesses aren’t ready for this kind of disruption. Without tackling the challenge of integrating legacy systems, the industry risks skipping a crucial evolutionary step.
Wealth management has yet to experience its iPod moment, let alone its Spotify revolution. To unlock the benefits of cutting-edge technology, we must first embrace solutions that bring cohesion between the old and the new. The tools for automation and AI are already accessible; what’s missing is a willingness to take that leap, often requiring a champion within the organisation to show the way.
Platform 3.0:
Consider the emergence of Platform 3.0, the new generation of investment platforms. These promise richer functionality, tighter integration, and even innovative business models, such as Adviser-as-a-Platform. However, integration challenges remain. Asset allocation processes, for example, are still disconnected. Similarly, portfolio products rely on a supply chain push model with minimal coupling due to a lack of straight-through processing. Advisors influence where assets are directed, but the upstream inefficiencies often go unnoticed.
In an integrated ecosystem, the industry could achieve far more. Advisors could offer bespoke products tailored to specific investor groups, while discretionary portfolio managers could keep allocations aligned with greater precision. Platforms would better manage liquidity and inventory, and fund managers at the top of the chain could expedite the release of funds and special share classes. The result? More choice, lower costs, enhanced risk management, and improved outcomes for end investors.
Andrew Spence, of Aspen Advisers, has often presented the game changing effect that multi-platform integration could have on the model portfolio (MPS) landscape.
Commenting on his vision, he stated that “The Aspen business was initially going to be fully customisable portfolios – the optimal mix of assets for a client’s circumstances and needs – in a move away from traditional “cookie cutter” models. But it was a non-starter across multiple platforms. So, we needed to scale that back and offer advisers a complete CIP experience using model portfolio building blocks. Still, multi-platform integration of this scale takes time and resource. Better integration is badly needed”.
Tikker are working with Aspen to automate Portfolio Operations cross-platform, bringing this evolution within reach.
Overcoming the CD Era
Right now, the wealth management industry feels stuck in its pre-iPod phase—juggling stacks of CDs, painstakingly organising them, and dealing with inefficiencies that make progress feel like an uphill climb. Worse still, these inefficiencies ripple through the supply chain, consuming valuable time and increasing the risk of errors.
What’s needed is an iPod moment: a unifying system that bridges legacy technology and modern tools, streamlining processes to unlock new possibilities. With integration and automation, the industry can shed its clunky inefficiencies, empowering advisors to focus on delivering genuine value to clients.
The Next Generation’s Opportunity
The next wave of wealth management leaders holds the key to this transformation. They must embrace technology not as a threat but as an enabler of better client experiences and operational efficiencies. This might mean prioritising solutions that balance creditworthiness with operational risk, acknowledging the role of custodians in securing holdings.
By bridging the gaps between legacy and modern systems, the industry can evolve into something far greater. The question is whether today’s leaders will seize the opportunity—or let it pass, leaving the wealth management sector to languish in an outdated era. For those ready to embrace change, the tools are already within reach. What’s needed now is the courage to press play.
Tom Whittle, Founder, Tikker
PIMFA responds on behalf of our membership to numerous key issues within our industry. We do this via vital feedback and discussion with member firms via our committees, working parties and industry forums.
From this member feedback PIMFA create responses to consultation documents and discussion papers issued by bodies such as the UK’s regulator, the Financial Conduct Authority (FCA), Government departments and many European and International bodies.
The scope of regulation is increasing all the time and one of PIMFA’s key objectives is to ensure this regulation is proportionate and fair, bringing real benefits to the investment management and financial advice community and their clients.
Past consultation responses from WMA and APFA can be accessed via their respective archives.
