fscom News and Events

FCA issues statement on Covid-19

[fa icon="calendar"] 18-Mar-2020 16:54:52 / by Jamie Cooke

Jamie Cooke

 

FCA Statement on COVID-19In response to the Covid-19 situation, which saw many UK financial institutions enacting their contingency plans, the FCA issued a statement yesterday setting out their expectations on firms.   

There were two clear messages emanating from the statement. Firstly, the FCA expect all firms to be following and evolving their contingency plans to cope with the impact of this global event. The second message, which was more pronounced, was that they expect firms to protect consumers irrespective of any internal disruption. The importance of consumer protection was evident throughout the statement and reflected by the fact that reduced regulatory change programme was solely focused on consumer protection.  

 

They praised firms who had taken additional measures, over and above their regulatory obligations, to support consumers.  

Additional comments that the FCA made in relation to consumer protection are 

  • They welcome steps that firms were taking, within the flexibility afforded by the regulations, to protect consumers. Examples cited were removing penalty fees for accessing longer term ISAs to access cash and the well-publicised three-month mortgage holiday 
  • The importance of providing strong consumer support and service;  
  • Complaints must still be dealt with in the regulatory timescales (8 weeks for all firms except those offering payments services which are 15 days);  
  • Firms should make consumers aware of the increased risk of fraud as a result of increased digital banking due to branch closures;  
  • Ensure that vulnerable customers (which would include people who are not regular online or mobile bank users) are protected; and  
  • Ensure that restrictions and exemptions for ‘cover based’ products are fully transparent e.g. travel insurance.  

Understandably the FCA also stated that they expect firms to be monitoring their financial resilience and liquidity. They stressed that firms should be contacting them immediately where they believe their financial stability is difficult.  

With regards to an easing or relaxation of regulatory obligations, the FCA were clear that firms must still meet their regulatory obligations. For example, call recording and complaints handling should be addressed in line with the current regulatory guidelines. However, they did acknowledge that practically the Covid-19 situation may have a material impact of firms especially operationally. It was advised that where firms could not meet their regulatory obligations, immediate notification to the FCA was paramount.  

On a practical note, the FCA stated that firms should still submit regulatory returns as ‘normal’. However due to pressure placed on systems where a return cannot be filed, firms should keep records and submit as soon as possible.  

The FCA briefly touched upon the impact of the crisis on their operational capability. They reiterated their focus on protecting consumers and market integrity. In order to maintain this focus however they have postponed measures that are not critical to consumer protection such as open consultation papers and ‘Calls for Input’ to 1 October 2020. A list of these has been published on the FCA statement which can be found here (https://www.fca.org.uk/firms/information-firms-coronavirus-covid-19-response) 

Finally, the FCA commented that guidance for both firms and consumers will be updated regularly and advised firms to monitor these updates. However, it is likely that direct conversations with firms will not be as frequent and requests for meetings will be deferred (except for systemically important firms). We are aware however in the recent days that the FCA is continuing to use industry associations as a feedback loop 

From our perspective, we will continue to keep clients updated on these critical developments through our blogs which can be accessed via the fscom website, horizon scanning through the fscom Client Portal, LinkedIn, Twitter and email.

We also plan to deliver our usual face to face Regbites as free webinars in the coming weeks to keep clients abreast of key regulatory topics. 

Best wishes

Jamie Cooke

 

Topics: FCA, Payments sector, E-money sector, Covid 19