Supporting the UK’s financial sector through changing times
As Brexit, regulatory changes and digitalisation continue to impact the sector, asset managers are increasingly looking to specialist service providers to help them navigate new challenges and opportunities.
The UK financial services sector has been faced with many external disruptive forces in recent times, but one of its biggest ongoing challenges is staying competitive with its European counterparts. It’s not been an easy task thanks to the lack of European marketing passports, exclusion of retail funds, and issues relating to the Overseas Fund Regime (OFR). And firms have had to spend time preparing clients for the changes wrought by Brexit.
Last year, however, the UK government made moves to address this concern with its review of the UK Funds Regime. As a result, Long Term Asset Funds (LTAFs) were given the green light to launch from November 2021. And this year, unlisted Real Estate Investment Trusts will be able to operate from April. These developments are expected to put the UK in a good position to become a more attractive domicile for asset-holding companies.
At Apex Group, we have also expanded our services to support clients through these changes. For example, our acquisition of FundRock in 2021, allows us to act as an investment adviser and distributor of shares/units of funds, so we can support clients through Management Company (ManCo) and distribution services. It also means we can act as a global distributor/sub-distributor of the funds managed by our affiliates.
We use our free provision of services (passport) through the EU to offer a long-term and stable solution to our clients. FundRock clients also have access to our international presence and new jurisdictions through our globally connected operating model across 45 offices.
Servicing sustainability needs
Away from Brexit and changes to the UK funds regime, there is a raft of other new and updated regulation driving change in the UK’s financial services space. While this is creating challenges, it is also opening the door to new opportunities.
Efforts to transition to a net-zero economy by 2050 is just one example. In accordance with the Task Force on Climate-related Financial Disclosures (TCFD), firms must now report annually on how they are taking climate-related matters into account when managing or administering their investments.
Compliance with TCFD requires firms to have an additional layer of expertise in environmental issues to interpret ESG-related guidance and to gather ESG data. We are now finding that clients want services that help asset managers, asset owners and standard-listed companies comply with the Financial Conduct Authority’s (FCA) new TCFD disclosure rules.
Our services encompass ESG compliance advice on policies and procedures, carbon footprint, training, and financial promotions servicing to help firms overcome these new challenges and comply with the TCFD disclosure rules.
Despite the changes across the UK’s financial service industry, London remains an influential centre. Additionally, neither COVID-19 or Brexit, have significantly diminished the lure of London as the most desirable location to establish, run and grow a FinTech business.
The independent Fintech Strategic Review, which was launched in 2020 to identify opportunities to support growth in the UK technology sector, is currently establishing priority areas for industry, policymakers and regulators to support the UK fintech sector. As part of this, the FCA is set to support the sector with a regulatory framework to protect consumers from cybercrime as digitisation continues to accelerate. The new framework will also enable growth and enhance innovation.
Apex Group’s Global Compliance Solutions team services the FinTech community in London and internationally. Clients benefit from our specialist knowledge of global and local, current and emerging regulatory, compliance and cybersecurity considerations, their implications for the UK’s financial sector, and opportunities for digital financial services.