FAQs - The Fiduciary Rules and Pension Rules
The Fiduciary Rules and Guidance 2020: Acting with Integrity (“Fiduciary Rules”) and the Pension Scheme and Gratuity Scheme Rules and Guidance 2020: Acting with Integrity (“Pension Rules”)
On 31 December 2020 the new Fiduciary Rules and Pension Rules will come into operation, replacing:
- the Code of Practice – Corporate Service Providers, the Code of Practice – Foundation Service Providers Code of Practice – Trust Service Providers, the Code of Practice – Company Directors (together the “Codes”); and
- the Regulation of Fiduciaries (Accounts) Rules, 2001, The Financial Resources Requirements Rules, 2018 and the Pension Licensees (Conduct of Business) & Domestic and International Pension Scheme and Gratuity Scheme Rules (No. 2) 2017 (together the “Rules”).
The following provides guidance on questions relating to implementation of the revised framework. This list will be updated as necessary to reflect any significant arising questions.
Where a derogation, modification or waiver has been issued by the Commission under the old Codes or Rules, such derogation, modification or waiver will be deemed to continue in respect of equivalent provisions under the new Fiduciary and Pension Rules. If clarification is required licensees should seek to engage with the Commission as soon as possible to ensure there is no breach arising as a result of an existing derogation, modification or waiver not meeting the requirements of the Fiduciary Rules or the Pension Rules.
Any new request for the Commission to consider a derogation, modification or waiver from the Fiduciary Rules or the Pension Rules may be sought prior to 31 December 2020, however any such request should be accompanied by a rationale explaining the need for such a derogation, modification or waiver and set out why there will be no detrimental impact to any person to whom the licensee provides regulated activities should a derogation, modification or waiver be granted.
The Fiduciary Rules and The Pension Rules were made in February 2020. Rule 7.1 of the Fiduciary Rules sets out that licensees must complete amendments to their internal controls to ensure compliance with the Fiduciary Rules by 31 December 2020. A similar provision exists in Rule 4.1 of the Pension Rules. The Commission would expect existing licensees to have reviewed their policies, procedures and controls and made any amendments identified as necessary to those policies, procedures and controls by 31 December 2020.
Where a licensee believes that it will not be in a position to meet the new requirements introduced by the Fiduciary Rules and Pension Rules by 31 December 2020 it should contact the Commission as soon as possible to discuss this further.
Rule 3.4 of the Fiduciary Rules sets out that licensees should provide and agree terms of business for any person for whom the licensee proposes to provide regulated activities. For any new regulated activities to be provided to a person with effect from 31 December 2020 the Commission expects that licensees will comply with the requirements of Rule 3.4. The Commission recognises that Rule 3.4 applies to proposed contracts or agreements for the provision of regulated activities, i.e. for new business post 31 December 2020. Terms of business may already be in place for existing relationships but not comply with the requirements of Rule 3.4(2), in the event that new regulated activities are proposed for an existing relationship licensees should refresh terms of business to comply with Rule 3.4. Licensees may choose to provide information on new or amended terms of business via reference to standard terms published on the licensee’s website.
Where no terms of business exist between a licensee and a person being provided with regulated activities the licensee may wish to consider if it is appropriate to obtain agreement from the person in order to comply with Rule 3.4.
The Fiduciary Rules come into operation on 31 December 2020. From that date onwards the Commission would expect to be notified within 14 days of any new significant outsourcing arrangement being entered into, any material changes to significant outsourcing arrangements and where there is a failure of an outsourced service provider or other breakdown in the provision of outsourced services which causes significant disruption to the licensed fiduciary’s business. Notification of material outsourcing arrangements in place prior to 31 December 2020 need not be made.
Notifications regarding Outsourcing may be made through the Online Submissions Portal via Form 220 – Outsourcing.