The Financial Conduct Authority (FCA) and the Commission de Surveillance du Secteur Financier (CSSF) have outlined their institutions’ priorities for 2024, emphasising consumer protection, liquidity management and sustainable finance.
During the “Alfi London Conference: synergies for asset management,” Mhairi Jackson, manager of funds and asset management policy at the FCA, and Marco Zwick, director of the CSSF, detailed their respective goals in a session titled “Let’s hear it from the Regulators”.
Jackson highlighted the FCA’s focus on consumer duty regulations, sufficient firm capital and liquidity to manage risks, as well as the importance of a smooth transition post-Brexit.
Sharing the FCA’s perspective on the early stage long-term asset fund (LTAF), a fund the FCA authorised in March this year, Jackson emphasised the time it will require for a “cultural shift” to happen within the UK. “We have finalised our rules earlier this year to broaden out the long-term asset fund in the distribution,” added Jackson.
Interestingly, Luxembourg emerged as a key priority for the two financial authorities, with Zwick highlighting how the domicile covers 60% of the existing European long-term investment funds (Eltifs) and is now “fighting a battle for improvements in Eltif 2.0” – the new regime slated for implementation in January 2024.
Zwick highlighted Luxembourg’s asset management industry, praising it for its stability despite global financial volatility and underscoring the importance of liquidity management in the face of shadow banking risks: “We have implemented safeguards like fostering close market relationships in the market. The focus is on liquidity management, and tackling the shift in international consideration of shadow banking or non-bank intermediation business posing risks of contamination.”
Both speakers stressed the necessity of individual fund evaluations and robust compliance in delegated activities.
Additionally, Jackson addressed the complications Brexit has introduced to cross-border funds distribution and explained the FCA’s efforts to facilitate this transition starting in April of next year.
Lastly, Zwick shared positive findings from a recent anti-money laundering report on the Luxembourg industry and stressed the need for compliance officers to understand external systems used in delegated activities comprehensively. Compliance is also ensuring a review of parameters, concluded Zwick.
Further event details can be found here.
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