The FCA expects firms to use flexibility to support consumers, has delayed new publications, and extended deadline for responses to published consultations to 1 October 2020.

By Rob Moulton, Jonathan Ritson-Candler, and Anna Lewis-Martinez

The Financial Conduct Authority (FCA) has published a new webpage providing information on its expectations of firms’ response to the coronavirus. It will update the webpage over the coming weeks and expects to adapt its guidance accordingly. Firms are therefore advised to check the webpage regularly for updates.

Key messages from the FCA are that it expects all firms to:

  • Take reasonable steps to ensure that they are adequately prepared to meet the challenges to both their business and their customers as a result of the coronavirus, particularly through their business continuity plans
  • Provide strong support and service to customers
  • Actively manage their financial resilience and liquidity, reporting to the FCA immediately if they believe they will be in difficulty

The FCA’s primary goals are to ensure customers are protected and that markets continue to function well.

Market Trading and Reporting

The FCA is cognizant that firms are moving to alternative sites and engaging in widespread working-from-home arrangements, and reminds firms to be aware of the systems and controls challenges that could arise in these circumstances. For example:

  • Firms should continue to record calls and electronic communications that are within scope of the rules, irrespective of the fact that staff may not be in their typical office. Where they are unable to do so, firms should take steps to mitigate the associated risks (e.g., enhanced monitoring and/or retrospective review).
  • Where firms experience difficulties in submitting their regulatory data (e.g., pre- and post-trade transparency reports and transaction reports), the FCA expects them to maintain appropriate records and submit the data as soon as possible. Firms are reminded that this does not permit them to unnecessarily delay these submissions. If firms do anticipate difficulty in meeting their ongoing reporting obligations, they must contact the FCA as soon as possible to discuss their arrangements.
  • Firms should continue to take all steps to prevent market abuse risks. The FCA will continue to actively monitor for market abuse (and take enforcement action where necessary).

Firms should mitigate the impact on consumers

Firms should take initiatives that go beyond their usual business practices to support customers, noting that the FCA considers its rules as already providing that flexibility to firms. Examples include waiving fees associated with accessing Individual Savings Accounts (ISAs) or deposit accounts and granting customers flexibility in relation to their mortgage payments. Where firms do implement such strategies, they should notify the relevant regulator.

The FCA expects firms to continue to handle customer complaints promptly and within the prescribed timeframes. Where this is not possible, firms should write to customers explaining why they have not met the deadline.

The FCA has also provided specific examples of best practice:

  • Access to cash: Firms should take measures, such as increasing daily cash withdrawal limits, to enable customers to have sufficient access to cash.
  • Unsecured debt products: The FCA wants firms to show greater flexibility to customers in persistent credit card debt. For example, FCA rules require that where a customer makes minimum repayments for 36 months, the debt provider must offer the customer options to repay the debt more quickly. If the customer does not respond to this outreach, the debt provider must suspend the customer’s card. For customers currently in this situation, debt providers are to give customers until 1 October 2020 to respond to their communications before suspending their cards.
  • Travel insurance: Relevant exclusions should be made clear to customers both on insurers’ websites, and customers should be able to reach call centres to answer queries.
  • Health insurance: For example, if a policy will not pay out for 12 or 18 months after coverage starts, this should be brought to the customer’s attention.

Delays to forthcoming FCA publications and extended period to provide feedback to open consultations

The FCA is also reviewing its current work plans such that it can postpone regulatory change activity which is not critical to protecting consumers and preserving market integrity during this time. As a result, the FCA will continue with a small number of planned regulatory change initiatives which will protect vulnerable consumers or otherwise where major long-term programmes would be disrupted. Otherwise, the FCA has extended the closure dates for feedback for its published Consultation Papers and Calls for Input, listed at the end of its webpage, until 1 October 2020.

Please also see the FCA’s Primary Market Bulletin Issue No. 27 — Coronavirus update, which provides key commentary for issuers and market participants in light of the pandemic.

For information on the US response, see Latham & Watkins’ blog post FINRA Issues Guidance and Relief in Relation to COVID-19.