UK: Deloitte Financial Services Fundamental News (Part Two)

Last Updated: 23 February 2006
Most Read Contributor in UK, August 2017

Pensions – new opportunity or threat?
By Jonathan Bundy and Kate Spencer

Is Lord Turner about to introduce fund managers to 12 million new customers?

The long anticipated Turner Report was published in November 2005. If the government acts on its recommendations, the UK pensions landscape will undergo and remarkable change. The most obvious benefit to the fund management industry would be the chance to add up to 12 million new customers to their books. But as Jonathan Bundy and Kate Spencer point out, there are also potential downsides to this apparent bonanza – a Turner approach to pensions could result in an industry-wide downturn for contributions and fees. Fund managers need to realise all the implications – in order to draw up strategies and plan contingencies.

In the Pension Commission first report from 2004, Adair Turner, the Commission Chairman, suggested that the options facing the UK were either that pensioners will become poorer relative to the rest of society or one or more of the following must occur:

1) taxes/National Insurance contributions devoted to pensions must rise;

2) savings must rise;

3) average retirement ages must rise.

The second report represents a positive step in helping address the potential pensions crisis in the UK by aiming to tackle both the adequacy of state pensions and the widening of private pension provision. The key recommendations of the report are based on a combination of reforming the state pension enabled by higher taxes, more savings and increasing the state pension age.

More specifically the recommendations are:

  • Linking the state pension age to life expectancy which could therefore result in a rise from age 65 to 68 by 2050.
  • Linking future increases in the basic state pension in line with earnings rather than prices.
  • Changing the second state pension to a flat amount and reducing the role of means testing.
  • The creation of a new National Pension Savings Scheme (NPSS) that would reduce the cost of pension savings by limiting the need for advice via auto-enrolment and the use of default investment funds, collecting premiums through existing PAYE systems, and administering the funds centrally. Turner concluded that a large, publicly run pension scheme will be significantly cheaper to administer than can be achieved within the private pensions industry.

Of key importance to the fund management industry is the recommendation for the NPSS. To be introduced by 2010, the scheme aims to encourage more private savings for anybody in the workplace. The characteristics of the scheme are as follows:

  • Employees would automatically be enrolled into NPSS, unless they opted out, and contributions of 8% of relevant earnings would be paid into the account (3% from employers and 5% from employees).
  • With relevant earnings being between £4,888 and £32,760 this would generate an annual contribution of £2,230 for those with earnings at or above the upper limit (or £1,130 if applied to average earnings of those in work i.e. based on £19k individual income).1
  • An additional 8% contribution can be made but subject to a maximum £3,000 cap. Decisions on the range of funds will be subject to further analysis and consultation but Turner’s preliminary recommendations are:
  • Fund mandates would be negotiated on a bulk basis by the NPSS with the logic that this could deliver relatively low cost fund management.
  • There will be a default lifestyle fund that switches to more secure investments as retirement approaches.
  • There should be a limited set of investment choices available as alternatives to the default fund, with a preliminary recommendation of 6-10 mandates covering major asset classes including indexed funds and a government bond fund. This is similar to the model employed by the US Thrift Savings Plan for federal employees.
  • Either these negotiated funds should form the total choice available for NPSS or other funds could be offered at non-negotiated fees. This second option could allow alternative investment management styles such as hedge funds and private equity funds or ethical and environmental funds.

Overcoming the barriers to pensions Saving

These recommended changes are expected to meet the objectives of boosting pension savings, especially among the millions who lack a good workplace based pension scheme or who have chosen not to join one. The report effectively addresses many of the key barriers to pension savings in the UK:

  • 10-12 million out of a working population of 26 million do not participate in a good workplace based pension scheme. The establishment of the NPSS will solve this for many (clearly more advantageous to the younger who have more years to save than 48-64 year olds).
  • Disincentives to save for those on lower incomes, due to means testing and tax credits will be addressed to an extent through the simplification of the state pension.
  • Retirement savings inertia among consumers will be overcome via auto enrolment (the need to opt out as opposed to opt in), default funds and a mandatory employer contribution.
  • The uneconomic size of many pension pots will be addressed as NPSS is portable and is not linked to one employer.
  • High pension charges associated with marketing pensions to individuals will be tackled via auto-enrolment and default funds that reduce (but do not remove) the need for individual advice and marketing.

Potential impacts on the Fund Management industry

If implemented, the proposals for NPSS present both opportunities and challenges for the fund management industry.

1. What is the opportunity?

  • Additional revenue flows arising from the contributions from the currently unpensioned into the fund management industry. Over time, it is estimated that an additional £5 billion per annum in new pension savings will flow into long term savings from the 12 million individuals currently not in a good workplace scheme.
  • In the longer term, existing insured group pensions business could be re-written into NPSS as employers change their pension models to reflect the new environment. Total assets in insured schemes today represent about £600 billion.
  • Consumers may become increasingly sophisticated as they are forced to take more interest in their pension savings. In the longer term this may lead to a more sophisticated, demanding consumer who is more able to engage with the industry in an informed way.

2. Meeting the Turner challenge 

The focus is undoubtedly on low costs, with the report envisaging total expenses of around 0.3% per annum including fund management fees of just 0.08%. This suggests:

  • To be selected by the central administrator as one of the fund options, fund managers will have to offer an institutional fee schedule and service level commitments. Fund managers will therefore have access to new flows, but at very competitive prices.
  • The scope for active management within the target cost structure may be limited and those investment firms specialising in low cost trackers may be better placed to participate.

Successful fund managers are likely to be those with retail brand names and strong individual servicing capability. In the US the majority of 401(k) retirement money flowed to the largest fund groups and to funds with Morningstar 5 star ratings.

3. Are there negative implications? 

There is the risk of contagion arising in two possible ways:

  • The 8% contribution becomes the norm and existing, more generous pension schemes reduce contributions down to these levels. Average contributions are currently 18% into defined benefit schemes and 10% into defined contribution schemes. These are higher than into the proposed NPSS especially when the relevant earnings band is taken into account.
  • Fees on existing pensions business may be squeezed down towards NPSS levels. 

Other impacts may include:

  • Existing group schemes closing and moving to NPSS as employers aim to further simplify their pension arrangements and do not see the need to run multiple schemes.
  • Greater competition for business outside National Pensions Savings Scheme, especially from fund managers who are not selected to be one of the fund options.
  • Fund management intermediaries that also depend on commission and fee income from advising on and selling life company pensions could see reduced revenues.

4. Impacts for specific fund managers 

Impacts will vary depending on the participation of the fund manager in the new environment. For example:

i) A fund manager participating in the NPSS default fund:

  • Although the default role is likely to take significant volume, competition with the core funds implies marketing spend and therefore has an implication for costs. 
  • The challenge will remain one of implementing a lifestyle fund that keeps costs low.

ii) A fund manager participating in funds for NPSS (not default):

  • Mandates are likely to be won by those with existing scaleable operations and expertise in low-cost passive funds that track indices.
  • Competition to manage funds is likely to be high - since publication of the Turner Report some of the largest fund managers have indicated that a 0.3% AMC is feasible.
  • Those core funds with the strongest ‘retail appeal’ will be able to attract above average NPSS market share.
  • The role may require significant marketing spend to attract money away from the default option and competing mandates.

iii) A fund manager offering non-negotiated funds that are accepted as part of NPSS:

  • It is not clear if any cap will be applied to these funds, although the challenge is likely to be to persuade individuals that they should pay more than the envisaged 0.08% negotiated charge.
  • There could be a significant opportunity for niche players in targeting specific tastes whether based on personal values or a desire to enhance the overall risk/reward profile of their NPSS ‘pot’.

iv) A fund manager not participating in NPSS:

  • Potential decrease in market share. Experience in the US shows that firms such as Fidelity and Vanguard have enjoyed an increase in market share since the introduction of the 401(k) pension plans.
  • Increased industry competition triggered by challenge to meet NPSS costs. This may lead to industry consolidation.
  • Squeeze on costs may trigger increased focus on outsourcing of, for example, custody and fund accounting.

Conclusions

Whether fund managers are currently active participants or interested observers in the development of Turner’s suggested solution, they are likely to be impacted by the fundamental changes to pensions that are being recommended.

The Government is aiming to move at pace to progress their plans and now is the time for fund managers to be drawing up their strategies and planning contingencies as future scenarios develop. Firms should be identifying their preferred position and planning to achieve it through lobbying and careful positioning of their capabilities.

1 Source: Wealth & Portfolio Choice 2002, Deloitte Research

A regular approach to regulation
By Diana Winton

ITCs’ systems stay as they are – provided they retain their current vigour The issue of whether Investment Trust Companies (ITCs) are properly regulated has been on the table since 2002. Here, Diana Winton examines all the options before the Treasury, and explains why, albeit with certain pre-conditions, the Government finally opted for the status quo – with the FSA continuing to set the rules.

There was general relief in the investment trust industry when the Treasury published its conclusions on the regulation of ITCs on 17 November 2005. The existing regulatory structure will not be changed, as it has been shown to operate effectively, but the regime must remain robust and adaptable to ensure that the industry operates to the highest standards.

Background information

The adequacy of the regulatory system in respect of ITCs has been under scrutiny since 2002, when many investors in the split capital sector suffered heavy losses. As a result of the ensuing publicity, the Treasury Select Committee conducted an inquiry into the events surrounding the problems experienced by certain splits.

The Committee recommended to the Treasury in February 2003 that ITCs should be brought directly within the scope of investment product regulation by the FSA, in the same way as other pooled investment vehicles, namely unit trusts and Open-Ended Investment Companies (OEICs).

Meanwhile, the FSA took action in response to the problems with splits. In January 2003 it published a consultation document (CP164) on proposed changes to the Listing Rules, the Conduct of Business Rules and the Model Code, although the changes to the Model Code were not directly linked to the splits problem. As a result of this consultation process, the Listing Rules were amended in October 2003 to restrict fundsof- funds investing in other funds-of-funds, one of the major factors behind the collapses in the splits sector.

The main changes made to the Listing Rules were:

  • A UK listed investment company may not invest more than 10% of its gross assets in other UK listed investment companies that do not themselves have a stated policy to invest no more than 15% of their assets in UK listed investment companies.
  • Listing documents must have a section on specific risk factors upfront, including the extent of intended borrowing and an explanation of the risks associated with investing in geared companies.
  • Enhanced disclosure of information regarding investments.
  • Enhanced director independence, in particular no more than one director or employee of, or professional adviser to, the investment management firm may sit on the board of a given investment company.
  • Boards must disclose in the annual report and accounts a summary of the principal terms of any investment management agreement and state whether the continuing appointment of the fund manager is in the shareholders’ best interests, with reasons.
  • Material changes to the investment policy may only be made with shareholders’ approval.

The COB rules, which apply to firms through which purchases of shares in ITCs are generally made, were changed to provide further guidance on the risk warnings that should be provided to investors in respect of geared investment portfolios.

The Association of Investment Trust Companies (AITC) also took steps to improve standards by issuing a Code of Corporate Governance for its members in July 2003, updated in January 2004, which complements the Combined Code and focuses specifically on issues affecting ITCs.

The Treasury consultation process

In response to the Select Committee’s recommendation to the Treasury, the Government requested views from interested parties on whether there was a need to introduce additional regulation. The consultation began in November 2004 when the Treasury issued a lengthy consultation document designed to stimulate discussion. This set out in detail the current regulation of ITCs and compared it with that of unit trusts and OEICs to determine whether there was a regulatory gap which needed filling. It acknowledged the action already taken by the FSA as outlined above. Regulatory differences – four main differences were identified, as follows:

  • ITCs are excluded from the definition of collective investment schemes under the Financial Services and Markets Act 2000 (FSMA) and do not have to be "authorised persons". They are not regulated as products, so the FSA has no direct power to make rules for them or intervene on their activities.
  • As ITCs are not authorised persons, there is no requirement for the identification of "controlled functions" or that those performing them be approved by the FSA and therefore meet the minimum standards that approval requires.
  • The Financial Ombudsman Service (FOS) is not available to investors for complaints against an ITC itself, or against the company’s fund manager (where there is one).
  • The Financial Services Compensation Scheme (FSCS) is not available in the event of an investor having a claim against an ITC, which the company cannot meet.

Views were sought on whether all significant differences had been properly identified and whether there were any other regulatory issues to be considered.

Possible regulatory options – the consultation document set out four possible regulatory options to consider in the context of whether or not there was a case for additional regulation, with an analysis of the cost and benefits of each one. Various specific questions were posed on the issues raised, including whether there might be any unintended consequences arising from the proposed changes.

The four possible regulatory options were:

1) Amend FSMA 2000 to regulate ITCs on a similar basis to authorised unit trusts and OEICs, so they would be regulated as products as well as having to be authorised persons.

2) Amend legislation to bring ITCs within the definition of "collective investment schemes", so they would be regulated as authorised persons but not as authorised products.

3) Amend legislation to create a new regulated activity of "establishing, operating or winding up an investment scheme based and listed in the UK, which has a stated objective of spreading risk such that no single holding exceeds 15% of the value of the scheme’s assets". ITCs would then come within the scope of Part 4 FSMA 2000 and would be regulated as authorised persons, but they would continue not to be collective investment schemes and would not be regulated as products.

4) Continue to rely on existing FSA rulemaking powers such as the Listing Rules.

Responses to the consultation proposals

The Treasury received more than 120 responses to its consultation document, mainly from ITCs and management companies but also from consumer representatives, investors and professional advisers. The AITC published a detailed response in February 2005.

The overwhelming response to the consultation was in support of option (4): continuing to rely on existing FSA rule making powers to deliver appropriate and effective regulation of ITCs, although various suggestions were made to extend the jurisdiction of the FOS.

The main points made are summarised below.

Is there a regulatory gap?

  • It was generally questioned whether the differences in regulation between ITCs and unit trusts and OEICs could accurately be described as gaps. The FSA in its capacity as the UK Listing Authority has substantial powers to intervene in the activities of ITCs and their directors. It was argued that the changes made to the Listing Rules following the splits problems had demonstrated that effective action could be taken by the FSA using its current powers.
  • It was argued that bringing ITCs into product regulation would increase costs without delivering significant benefits and there was concern that it might reduce the diversity of the ITC sector, leading to a reduction in consumer choice.
  • There was little support for identifying controlled functions or for requiring directors to be approved by the FSA, as they are already subject to a range of requirements under company law, the Listing Rules, the Combined Code on Corporate Governance and the AITC Code.
  • There was minimal support for extending the jurisdiction of the FOS to considering complaints against ITCs themselves or for providing recourse for shareholders to the FSCS when an ITC cannot meet all claims against it. It was questioned whether there could be any justification for giving shareholders of ITCs, who bought shares on an execution only basis, radically better remedies than those available to shareholders of other companies. However, various suggestions were made for tightening the rules on financial promotions.

Comments on the suggested regulatory Options

  • Option (1) attracted the most comment. It was seen as a disproportionate response, which would increase costs without significantly improving investor protection and would have serious implications for the ITC sector. The distinguishing characteristics of ITCs would be lost, consumer choice would be diminished and there would be restrictions on borrowings and investments that could lead to increased costs of borrowing and opportunity costs.
  • Option (2) met with similar criticisms, with the addition that it might force life insurance companies to sell their shares in ITCs (with a detrimental effect on discounts) because unauthorised collective investment schemes do not meet the permitted investment rules for life companies. It was also noted that the current COB rules would prevent the promotion of ITCs to the general public, which the respondents considered would be catastrophic for the industry.
  • Option (3) was also considered a disproportionate response because ITCs cannot promote their own shares to investors outside the context of an initial listing. There would be no significant benefit in requiring directors to be authorised by the FSA as they can already be disqualified if they are not fit and proper persons.
  • Option (4) was the favoured option, as noted above. It was emphasised that this did not imply no change because further changes could be made to the Listing Rules if deemed necessary.

The Government’s conclusions

After considering all the responses to its consultation document, the Government has concluded that on balance options (1) to (3) would not result in better regulation than could be delivered using existing FSA rule making powers. It accepts that the costs of the proposed changes outweigh the possible benefits and that these costs would likely be passed on to consumers. While increased costs would have to be accepted if the current regime left consumers facing unacceptable risks, this was not perceived to be the case.

However, while accepting that radical change to the structure of regulation for ITCs is unnecessary, effectively adopting option (4), the Government emphasised the importance of the current regime remaining robust and proportionate. It welcomed the FSA’s prompt action in the wake of the splits problems and its review of the Listing Rules, and the steps taken by the AITC to improve governance standards in its member firms.

The Government also considered the case for extending the jurisdiction of the FOS and the FSCS to investors who buy shares in an ITC on an execution only basis (the FOS can investigate complaints against financial advisers, brokers and anyone who promotes ITC shares), but was not convinced by the arguments for the case.

It noted that it would be difficult to limit such an extension to investors in the shares of ITCs and an extension beyond the ITC sector would raise significant questions about the role of the FOS, the cost of considering complaints and who should pay.

As regards financial promotions, the Government was attracted by the suggestion that all such promotions relating to shares in an ITC should contain a warning that recourse to the FOS and the FSCS is not available to direct investors. It has invited the FSA to consider this suggestion as part of its wider review of the financial promotion rules. 

Technical update
By Aedana Ward

A consideration of some of the recent technical matters affecting the Investment Management Industry 

Tax update

Pre Budget Report December 2005

The Chancellor carefully circumnavigated the current controversies and debates affecting the pensions and savings industry in the December Pre Budget Report. The measures mooted for the savings sector were largely uncontroversial with the exception of the perhaps obvious curtailment of potential opportunities to maximise tax reliefs on contributions to SIPPs.

Apart from heralding publication of draft legislation for Real Estate Investment Trusts (‘REITs’) and draft regulations for Authorised Investment Funds (‘AIFs’) few significant measures were announced for the savings industry sector. Most notably there was no further comment on the full streaming regime proposed in Budget 2005. However it is encouraging to glean apparent commitment to certain savings and investment vehicles namely ISAs and Child Trust Funds.

Taxation of Authorised Investment Funds

While the Pre Budget Report itself was largely silent on anticipated measures impacting the taxation of authorised investment funds ("AIFs") draft regulations on taxation of AIFs were released within a matter of days.

The draft regulations on the expected 10% substantial holding measure raise some practical issues which could be resolved by widening the definition of excluded investors to facilitate fund of funds structures. A number of concerns have also been voiced on certain proposals within the regulations, namely the inadequacy of the 6 month period of grace for new funds and funds being liquidated. Clearly a more purposive approach in measuring shareholdings in these circumstances would dovetail more with the commercial considerations in launching or liquidating a fund.

The regulations are expected to come into force sometime in early April 2006 following a process of consultation and approval.

Child Trust Funds

A further consultation on contributions to Child Trust Fund accounts will take place. The Chancellor has announced that the Government will now invite comments on the eligibility criteria for and timing of additional payments for all children at age seven and what further payments should be made for children at secondary school age.

ISAs

Following on from the announcement in the 2004 Pre Budget Report, the Chancellor has reaffirmed that the list of qualifying investments for ISAs will be extended to include all FSA authorised retail schemes and alternative financial arrangements such as Shari’a accounts. This will widen the criteria for inclusion in an ISA for onshore and offshore funds which is a particularly welcome development for operators of now eligible offshore funds which do not have distributor status in view of the fact that the UK offshore fund rules do not apply to funds within an ISA wrapper.

We welcome the fact that the current limits of £7,000 for equity ISAs and £3,000 for cash ISAs are to continue until 2010. The Government have also enabled credit unions to provide ISAs.

Venture Capital Trusts

In Budget 2004 the Government temporarily doubled the rate of income tax reliefs for investment in Venture Capital Trusts. There has been much speculation that VCT reliefs would be reviewed and the Chancellor has announced that measures will not be introduced until trends in the VCT market have been analysed further. Encouragingly the Chancellor reiterated the Government’s commitment to ensuring the success of the VCT market.

SIPPs

The much talked about widening of SIPP and SSAS permitted assets to include residential property and other tangible moveable property from 6 April 2006 has been curtailed to prevent what is perceived to be the potential for abuse of the tax favoured UK pension regime. From A-Day, direct and indirect investment by registered pension arrangements in prohibited assets such as residential property will be regarded as unauthorised member payments subject to punitive tax charge designed to remove all tax advantages. In addition, there are other technical changes announced, including a measure to prevent re-cycling of funds to boost the level of tax free lump sum payments.

REITs

Draft legislation establishing UK REITs will be included in the 2006 Finance Bill. Details of the tax proposals were published by HMRC towards the end of 2005. UK REITs will be based on the exempt company model, such that companies or groups that meet the UK REIT eligibility criteria will not pay corporation tax on qualifying property rental income, or qualifying chargeable gains. They will, though, be required to distribute at least 95 per cent of net taxable profits on rental income to investors. The regime will be open to UK resident companies that are publicly listed on a recognised Stock Exchange. Details of the conversion charge that will apply to companies entering the regime, are not yet available but are expected to be announced in Budget 2006.

Industry representatives have voiced a number of concerns on the REIT proposals in their current form, namely the absence of an open ended vehicle as a solution and the potential impact of the substantial holdings measure (10% measure) on the tax status of a REIT. The practical issues in monitoring ownership for publicly quoted companies should not be underestimated which may make it difficult in practice to determine whether the 10% measure applies.

Stamp Duty Land Tax

Contrary to the expectations of many, there have been no SDLT anti-avoidance measures, and specifically none in relation offshore Property Unit Trusts ('PUTs'), a vehicle commonly used to achieve SDLT-free sales. Speculation will now begin that the Government will alter the relief with effect from Budget 2006. This will probably form part of a series of SDLT anti-avoidance measures designed to stop arrangements that the Government perceive are abusive and which taxpayers have disclosed under the SDLT disclosure regime since 1 August 2005. In conclusion therefore, the opportunity to structure landholdings in an SDLT sufficient manner remains but is likely to be short-lived.

Hedge funds

Many hedge fund managers will be interested to note that the Government is continuing to review the residence and domicile rules as they affect the taxation of individuals. Now more than ever it is vital to ensure that the tax structuring and ongoing management for hedge fund managers is robust in the event of any scrutiny. It is likely that information gleaned by the special revenue investigations unit dealing with hedge funds may well form part of the ‘evidence’ based approach HMRC intend to use in taking the review forward.

Summary

The timing of implementation of certain aspects of proposed reforms to AIFs may depend to a certain extent on progress on the REITs legislation but clearly the numerous consultations currently underway should give sufficient opportunity to assess industry response before Budget 2006 and table the appropriate measures. 

Regulatory Update
By Paul Leech

HM Treasury Consultation on MiFID

December 2005 saw the issue of a consultation document by HM Treasury entitled "UK Implementation of the EU Markets in Financial Instruments Directive (Directive 2004/39/EC)." This issue of Fundamental News contains a detailed article on MiFID implications from a European perspective. The Treasury’s document looks at how the requirements could be incorporated into UK law. It is of note that the treasury felt it appropriate to state in the summary to the consultation document that they do not propose to lift the current restrictions on the promotion of unregulated collective investment schemes. Comments are requested by 31 March 2006.

Planning for MiFID

More detail on some of the FSA’s thinking on MiFID and the implications for the UK financial services industry was set out in a document entitle ‘Planning for MiFID’ issued by the FSA in November 2005.

A ‘must read’ for those involved in developing their firms approach to MiFID and a document containing useful information for your Board. Please also see our article "A catalyst for change – Europe wakes up to MiFID", for more information.

Asset Management Newsletter No.2

Also in December 2005 the FSA issued the second of its "Asset Management Newsletters". As well as containing some key messages on MiFID the newsletter confirms the FSA’s intention of implementing CRD rules from 1 January 2007. Perhaps one surprising aspect of this second newsletter is the FSA’s proposal to consult on allowing both Authorised Unit Trusts and Investment Companies with Variable Capital (ICVCs) to choose whether to use single or dual pricing.

Integrated regulatory reporting

The FSA have issued an update on progress towards mandatory electronic reporting. Most IFAs are already required to report electronically and from April 2007 the FSA investment expects firms to submit the ‘nonfinancial’ parts of the RMAR through an online system. In amongst the requirements of MiFID and the CRD, firms need to find time to make any changes necessary to implement this electronic reporting. The update can be found in the miscellaneous section of the other publications in the FSA Library.

Future publications

The next few months will see some important consultation documents on the FSA’s implementation of European Directives, as well as continuing changes in other areas. These include:

  • CP on MiFID – expected March 2006, but may be later.
  • Second CP on Strengthening Capital Standards – Q1 2006.
  • Regulatory Reporting Requirements under the CRD, feedback on DP05/1 – Q1 2006. Other expected publications of relevance to the fund management industry include:
  • Feedback on DP05/3 wider range of Retail Investment Products – Q1 2006.
  • Feedback on DP05/4 Hedge Funds – Q1 2006.
  • CP on Retail Investment Implications of Softing and Bundling Reforms – Q1 2006.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.