 Coronavirus (Covid-19)
The coronavirus (Covid-19) pandemic is reshaping the lives of most people, including their financial lives. The financial services industry has a vital role to play in supporting consumers, business and the economy through this extraordinary situation and into the recovery period.
Last week, we published our Business Plan for 2020-21. Our top priority is to deal with the implications of the coronavirus pandemic, taking a pragmatic and supportive stance to firms whilst not tolerating serious misconduct. We will make sure that people get the help, support and fair treatment that they need, and that businesses and financial services markets are clear on what we expect from them.
The coronavirus pandemic poses a significant new set of challenges. Despite such rapid change, it has never been more important for us to deliver on our objectives – protecting consumers, ensuring the integrity of financial markets, and making sure that competitive markets work well for consumers.
We have already responded quickly to developments to support consumers affected by coronavirus. Today, we proposed a package of measures covering motor finance and high cost credit agreements, which include high-cost short-term credit (such as payday loans), buy-now pay-later, rent-to-own and pawnbroking. These build on the package we introduced last week, which gives firms the flexibility to help people with some of the most commonly used consumer credit products.
But, we know our work isn’t done. We will continue to act where necessary, to provide the regulatory environment where firms like yours can concentrate on serving your customers.
Business Plan 2020/21
Last week, we published our annual Business Plan. Our highest priority is to deal with the implications of the pandemic quickly and effectively. We’re also transforming the FCA and the way we regulate, focusing more on outcomes, investing in data and intelligence, and ensuring that we act in an integrated way across our organisation. In the medium term, we will focus on areas of continuing harm – consumer credit, consumer investments markets, payments, and fair value and digital competition. We’ll keep our planning in these areas under review over the course of the year.
Last week, we published our annual fees consultation. We’re freezing the fees to be paid by the smallest 71% of financial services firms, and giving small and medium firms longer to pay. Our overall funding for this year will need to increase by a small percentage to allow us to respond to the pandemic, prepare for withdrawal from the EU, invest in transformation, and continue other critical work.
Senior Managers & Certification Regime (SM&CR)
We recognise that firms affected by coronavirus will need to keep their governance arrangements under review. We have taken steps to help firms in these circumstances. Read our statements on the SM&CR and coronavirus for dual-regulated and solo-regulated firms for more information.
Coronavirus updates
We’re launching a daily email round-up of FCA coronavirus news and publications published on our website. Join the list to receive our daily update, launching soon.
We’ve confirmed the range of temporary financial relief measures to quickly support users of certain consumer credit products who are facing a financial impact because of the exceptional circumstances arising from coronavirus. The full range of measures applied from Tuesday 14 April.
We’ll circulate key messages via our Twitter @TheFCA – please retweet and support where possible. We’ve also summarised the measures on our new landing page, which you can link to where appropriate.
Access to essential services
We’ve published additional information on how customers can access essential banking services during the crisis.
We urge customers to use alternatives to branches, such as online channels, wherever possible. We also recognise that for some services, and some customers, this isn’t always possible. Firms should have solutions in place to allow a trusted person to access bank services, including making payments and accessing cash, on a customer’s behalf.
This information has also been communicated to consumers via consumer organisations.
Guidance on our expectation of advisers giving defined benefit pension transfer advice
The coronavirus crisis may mean more consumers take advice about transferring out of their defined benefit (DB) pension scheme to a defined contribution (DC) pension scheme. We recently set out on our website what we expect from advisers giving defined benefit pension transfer advice during the pandemic. We continue to expect firms to provide suitable advice, and to follow the existing Handbook rules and guidance, in particular those set out in COBS 9, COBS 19.1 and COBS 19.2.2R.
Dear CEO letter - Insuring SMEs: Business Interruption (BI)
We have a published a Dear CEO letter focusing on BI insurance. We outline that, based on our conversations with insurers, we estimate that most policies have basic cover and do not cover pandemics. So on those policies the insurer is not obliged to pay out claims relating to the coronavirus pandemic. Where it is clear that the firm has an obligation to pay out, we expect insurers to assess and settle the claim quickly and we are encouraging insurers to issue interim payments. We also outline the access to the Financial Ombudsman Service.
Client assets and coronavirus
We have received queries on client assets (CASS) compliance related to the current disruption caused by coronavirus. Our web page covers areas such as handling of cheques, CASS audit reports, notification of CASS breaches. We expect firms to have taken reasonable steps to research and analyse the topic before approaching us (and in some cases, where possible, it may be helpful for firms to obtain professional advice).
Senior Managers and Certification Regime (SM&CR) and Coronavirus: our expectations of solo-regulated firms
We set out our expectations to help solo-regulated firms apply the SM&CR. We recognise that firms directly affected by coronavirus will need to keep their governance arrangements under review and make appropriate changes as circumstances change. We do not require firms to have a single Senior Manager responsible for their coronavirus response. Firms should allocate these responsibilities in the way which best enables them to manage the risks they face.
Joint FCA and PRA statement Senior Managers and Certification Regime (SM&CR) and Coronavirus
We are aware that significant changes to an SMF’s responsibilities may be required in this period due to sickness or any other temporary situations because of coronavirus issues. We understand the current operational challenges and are keen to ensure that firms prioritise their resources appropriately. With the PRA, we issued a statement which:
- expects firms to resubmit relevant SoRs as soon as reasonably practicable taking into account the current circumstances and
- understands that firms may take longer than usual to submit revised SoRs
The actions insurers and intermediaries should take to mitigate the impact of coronavirus on consumers
We note the recent statement from the European Insurance and Occupational Pensions Authority (EIOPA) on the actions insurers and intermediaries should take to mitigate the impact of coronavirus on consumers. We support the statement and encourage firms to consider what this means for their own customers and product offering. Insurers should continue to treat customers fairly by:
- providing them with clear and timely information
- keeping them informed about contingency measures put in place
- continuing to apply product oversight and governance requirements and
exercising flexibility in the treatment of consumers where reasonable and practical (including those in financial difficulty)
Guidance on dealing with customers concerned about investment falls
Concerns about the economic impact of coronavirus has created stock market volatility. At the same time, customers may find themselves in an economically vulnerable position because of the pandemic. As a result, many are likely to ask firms whether they should change, or sell, their investments.
We know some firms are concerned that, by answering customer questions, they might be viewed as giving personal recommendations. So we published guidance to clarify our expectations and support firms in helping customers at this difficult time.
Guidance to support conversations with customers as the pandemic develops
Our guidance for firms in the pensions and retirement income sector explores:
- how the existing requirements of Retirement Risk Warning rules empower providers to have the right discussions with their customers
- risk factors that might be particularly prevalent and relevant in current circumstances and
- how providers might make customers aware of the implications of their chosen action
The guidance also:
- reiterates our expectations of DB transfer advisers
- announces a 6 month delay to investment pathways implementation (recognising firms’ current operational challenges) and
- emphasises that firms must continue to treat their customers fairly and act professionally, in their client’s best interests
The actions Insurers and Intermediaries should take to mitigate the impact of coronavirus on consumers
We note the recent statement from the European Insurance and Occupational Pensions Authority (EIOPA) on the actions Insurers and Intermediaries should take to mitigate the impact of Coronavirus on consumers. We support the statement and encourage firms to consider what this means for their own customers and product offering. Insurers should continue to treat customers fairly by:
- providing clear and timely information to consumers
- keeping consumers informed about contingency measures put in place
- continuing to apply product oversight and governance requirements and
- being flexible where reasonable and practical (including for customers in financial difficulty)
UK UCITS and non-UCITS retail schemes: publishing fund reports and accounts in light of Coronavirus
On 6 April, we said we would not take enforcement action against authorised fund managers of UK UCITS schemes and non-UCITS retail schemes for breaches of relevant rules if they need extra time to produce annual and half-yearly fund reports and accounts.
See more information on this forbearance on our webpage.
Other funds: publishing fund reports and accounts in light of Coronavirus
On 9 April, ESMA published a statement about the deadlines for publishing annual and half-yearly reports which may be relevant to managers of other types of fund such as UCITS schemes authorised outside the UK, managers of other types of AIF, managers of EuSEFs and managers of EuVECAs. See ESMA’s statement.
FCA expectations on funds in light of Coronavirus
Firms have asked us about compliance with our rules on funds in the context of Coronavirus. On 6 April, we set out our answers to these initial queries on our webpage. We will update this page as the situation develops.
We expect firms to continue to act in the interests of the funds they manage and the investors in those funds at all times.
Temporary measures to help consumers with some consumer credit products
Following our brief consultation, we have now confirmed a package of targeted temporary measures to help people with some of the most commonly used consumer credit products: credit cards, personal loans and overdrafts. The full range of measures applied from 14 April 2020.
The guidance now also includes clarification on which products are in scope of the personal loans guidance. This includes guarantor loans, logbook loans, home collected credit, loans issued by Community Development Finance Institutions and some loans issued by credit unions, but only where they are regulated. The guidance also applies to firms which have acquired such loans.
Consumer Credit targeted temporary measures – update on other forms of credit
Friday 17 April we have also proposed new measures covering other forms of credit including high-cost short-term credit loans (including payday loans), rent-to-own, buy-now-pay-later, pawnbroking and motor finance, including hire-purchase and leasing agreements.
We are inviting stakeholders to comment on these proposals by 5pm on Monday 20 April 2020. Please send comments to: FCAconsumercredit@fca.org.uk
Access to essential services
We've published additional information on how customers can access essential banking services during the crisis.
We urge customers to use alternatives to branches, such as online channels, wherever possible. We also recognise that for some services, and some customers, this isn’t always possible. Firms should have solutions in place to allow a trusted person to access bank services, including making payments and accessing cash, on a customer’s behalf.
We have also communicated this information to consumers via consumer organisations.
Brexit
The UK left the EU on 31 January 2020 and has entered a transition period, which is due to end on 31 December 2020. Find out what this means for firms and consumers on our Brexit pages
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