UBS Secures Fresh US Pensions Licence After Fixing Paperwork Error

UBS AG, the Swiss banking giant, has secured a fresh licence to manage U.S. pension plans after addressing a paperwork error that led to the loss of its previous exemption. According to regulatory filings, the bank has taken steps to rectify the issue and regain its eligibility to operate in the U.S. pension market.

The U.S. Department of Labor (DOL) had previously revoked UBS's exemption from the Employee Retirement Income Security Act (ERISA) fiduciary rule due to a missed deadline for submitting an audit report by January 2024. This oversight put at risk UBS's ability to manage over $11 billion in U.S. retirement plans, a significant portion of its asset management business.

To address the regulatory hurdles and regain its licence, UBS took several measures. The bank adjusted its U.S. compliance team, including naming a second compliance officer to oversee the waiver process. Additionally, UBS reviewed over 16,000 transactions since June 2023 and identified a group of 300 to 400 loans not covered by alternative exemptions.

The merger with Credit Suisse in 2023 presented UBS with numerous challenges, including regulatory issues that led to the loss of its previous exemption. The integration process highlighted the importance of maintaining regulatory compliance during such transactions. UBS's failure to maintain its waiver from the DOL put its U.S. pension business at risk, with potential liquidation costs of at least $90 million for clients.

To prevent similar compliance issues in the future, UBS has implemented several measures. The bank has engaged an independent reviewer to assess the effectiveness and adequacy of its remedial measures taken in relation to its telephone recording failures. UBS has also committed to strengthening its systems and controls, improving client communication, and enhancing its compliance team.

The reinstatement of UBS's licence to manage U.S. pension plans is a significant development for the bank, as it allows it to continue operating in this key market. The bank's ability to address the regulatory hurdles and regain its exemption demonstrates its commitment to maintaining compliance and ensuring the protection of its clients' assets.

In conclusion, UBS's successful resolution of the paperwork error and subsequent reinstatement of its U.S. pension licence highlights the importance of regulatory compliance in the financial industry. The bank's proactive approach to addressing the issue and implementing measures to prevent future compliance issues showcases its dedication to maintaining the trust of its clients and regulators alike.