Strange new world

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Of course, the phrase is normally Brave New World, however, as I write events seem to be moving hour by hour. We all have to believe that on the other side of COVID 19 the economic wheels of industry will return to normal, but I can’ help but think many things will be changed.

We are getting daily updates on a number of property fund suspensions. Legal & General, Aberdeen Standard Investments, Janus Henderson, Columbia Threadneedle, Aviva Investors, BMO and Kames Capital have suspended dealing in their property funds with others likely to follow. Most pensions funds as well as retail investors will have exposure somewhere to property so the impact will be felt by almost everyone.

Probably not coincidental that the FCA wrote to Compliance teams, this week, seeking assurance that Authorised Corporate Directors (ACD) show that they have adequate reserves to cope with the current market turmoil. ACD’s have been asked to produce their ICAAP documents with details of their stress testing, wind down plans and liquidity assessment.

In a nutshell – these are difficult times for everyone but the regulator is making it clear that firms still have a responsibility to treat customers fairly

This is likely to add pressure on the margins of independent ACDs, of which there are c 15 in the UK presently. It does make you wonder how many there are likely to be in 2021. With the requirements of the Asset Management Market Study now 6 months in, who is likely to want to sit on ACD Board with the focus on governance as it is? I do wonder if the governance model may be casualty of the epidemic along with a number of traditional fund models which are clearly unable to cope with near vertical drops in the market. Equally, who and what can cope with the unprecedented situation we find ourselves in.

At the same time as writing to ACDs, the FCA’s update on COVID 19 for firms says “We expect firms to provide strong support and service to customers during this period. They should be clear and transparent and provide support as consumers and small businesses face challenges at this time. We also expect firms to manage their financial resilience and actively manage their liquidity. Firms should report to us immediately if they believe they will be in difficulty.”

In a nutshell – these are difficult times for everyone but the regulator is making it clear that firms still have a responsibility to treat customers fairly and if your planning and stress testing is shown to be weak you could be in some hot water after this crisis simmers down. Let’s face it no one knows if COVID will return later in the year ahead of vaccines being produced and of course there could be another new strain of virus to deal with.

Through all this, the health and safety of our colleagues is paramount, and I wish those who have been impacted nothing but best wishes at this difficult time. Equally for those business owners who like me are working hard to keep their businesses and staff teams going through this time, good luck and we’ll see you on the other side.

 

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Through our award winning training and consultancy partnership FSTP LLP we hope to become a trusted provider of services to client firms across Financial Services. Specialties: Training and consultancy, project and interim management from regulatory issues through to management development and board services. Chartered Member of the Chartered Institute of Securities & Investment

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