As we enter our 12th week of lockdown, the FCA has begun a process to obtain regular, specific data from a substantial number of firms to better predict the vulnerability of financial services firms, and thereby the impact on consumers. E-money issuers, payment service providers, CFD providers, advisers and intermediaries are among the targeted sectors and emails advising those selected for the first batch have already arrived with our clients. In this blog I will explain what the FCA is looking for and what you should be doing.
Payment and e-money institutions have long called for clearer guidance on the FCA’s expectations of how they meet their obligation to protect customers’ funds. Friday week ago, the FCA issued a consultation on temporary guidance they wish to put in place on safeguarding and capital adequacy ‘in light of the exceptional circumstances of the coronavirus pandemic’.
The FCA last week published a statement in which they set out their expectations of solo-regulated firms operating under the ongoing strain of COVID-19. While emphasising the need for ever-adaptive governance arrangements in the face of an evolving challenge, the FCA have clarified that no single Senior Manager is expected to assume responsibility for a firm’s coronavirus response. In addition to this and regarding dual-regulated firms, a joint statement released by the FCA in collaboration with the PRA demonstrated the regulators’ intention to assume a more flexible approach under the current circumstances.
On the 4 July 2019, the FCA released a ‘Dear CEO’ letter that addressed both the positive and negative practices of non-bank Payment Service Providers (“PSPs”) as they seek to comply with their obligations to safeguard customers’ funds. The FCA identified a number of failings in the safeguarding processes of the 11 PSPs it reviewed over a six-month period and has set out mandatory actions for PSPs.