FCA Trade Association COVID -19 liaison meeting

The Association of Professional Compliance Consultants (APCC) attended a Trade Association meeting with the FCA on 25 March to be updated on the FCA’s plans for coping with the COVID-19 pandemic.

Below, we provide a summary of the high-level points that arose from the meeting. 

  • Overall approach
    The FCA’s approach is to undertake a triage process along with the Bank of England and Treasury, to help consumers and firms do the right thing. Their key role is to reduce as much damage as possible and to ensure firms come out of this in the best shape they can. To address this and focus on the pandemic, they have scaled back future work that was scheduled, to try and elevate as much pressure from firms as possible.
    They anticipate dealing with large scale queries from the public and they will also be giving most efforts to helping protect the markets wherever they can.
    Where the FCA are able to relax rules or make policy changes to assist the market, this will be expedited.
  • Firm queries
    The FCA will provide responses to feedback and questions wherever possible but they are of course seeing a spike in enquiries at this time, so cannot guarantee a timescale for turnaround.
  • They advise firms to monitor the Coronavirus web pages they have set up on their website, as well as via their Twitter and LinkedIn feeds which will provide the most up to date information.
  • Life Insurance and Financial Advice
    As with most of the areas considered, operational resilience is key during the lockdown period. The FCA is focussing on the impact of lockdown and the definition of key workers and the ability for firms to still offer critical services. They are also focussing on the reliance on outsourcers within firm structures. They are monitoring consumer impact and consumer behaviour.  The regulatory regime around advice will be a key priority to ensure this continues to operate as per current expectations. They are working closely with the Pensions Regulator around DB schemes.
  • Retail Issues
    Banking, payments, credit/debt and mortgages is a key focus. They are trying to address the issue with access to cash and pressure points in the system, and they will ensure cash access continues.  Branch closures are an issue and they are looking to alleviate this for customers, increased demand for telephone banking is also causing a pressure point which they are working with banks to resolve. 
  • Mortgages
    The FCA is providing guidance on ‘payment holidays’ where this has been agreed with that provider and trying to avoid repossession situations. They are also working on ‘payment holidays’ with credit firms as well and provided guidance where possible.
    They are also working on scams that have occurred since the pandemic and investments and investment advice.
  • Scams
    Scams are an issue, and they are receiving a lot of communication around emerging problems. They will provide examples of scams that they see but have likewise asked that Trade Associations also flag any scams that the industry is seeing. The FCA scams will also be on their website as soon as they become aware. There is a scam page on their website. 
  • General Insurance
    The FCA has already issued their expectations of insurance firms and what customers should expect. They will continue to add to the website when updates are available.  Flexibility is key going forward, and they require firms to have operational resilience and have robust systems and controls. They are particularly mindful of where services are outsourced, such as claims management etc. They will try to provide further guidance on travel policies where policy changes may now be needed but remind firms they need to continue to treat their customers fairly for the whole product cycle.
  • Motor and home
    The FCA does not expect claims to be rejected where temporary changes have occurred such as customers working from their homes, and this should not invalidate a household policy, or where someone uses their vehicle for work where specifically in relation to the pandemic.
  • PMI
    Private hospitals are now supporting the NHS so this impacts on policies no longer being able to provide the private medical care they offered, as all non urgent care has now been cancelled. Insurers need to contact affected clients. Some products will need to be suspended if little or no cover is now being provided. This needs to be communicated to clients as early as possible. 
  • Insurance brokers
    IDD should still be followed. Insurance brokers have a key role in helping clients understand the changing markets and where they are impacted. They need to keep abreast of market developments so they can suitable advise their customers and the FCA will continue to work closely with this sector to provide as much support as they can. 
  • Wholesale
    Where firms are now working from home, they need to consider appropriate controls. Where they cannot record calls, they need to make the FCA aware of this otherwise the requirements to record calls are still in place. Where transaction reports may be delayed, firms will need to advise the FCA of this and to do this BEFORE the deadlines are missed, and not wait until after the deadline. All the usual requirements around the importance of being alert to market abuse risks remain in place and is very important to be maintained.  The FCA will continue to monitor that as they have done, and act where required. 
  • Asset Management
    The FCA recognises managing liquidity is challenging in the current climate and they are monitoring this very closely. Firms should look at the recent statements around this on the FCA’s website. They believe that the suite of tools firms has to manage liquidity work well and should be considered carefully, and firms should ensure they consider the best interests of their investors at all times. The role of the authorised fund manager becomes even more important now and they want to see good governance and robust decision-making being made in an orderly and timely way. Some UK property funds have suspended dealing due to the inability to accurately value commercial property and the FCA feel this is the right cause of action at this time. Firms will need to consider how other funds are monitored and ensure it is still appropriate. The focus on the importance of stress testing of funds is now showing as why importance was placed on this, as well as ensuring business continuity planning. If there are issues, firms should engage with the FCA.
  • Retail lending – Supervision
    They have diverted resource to monitor the impact of firms financial resilience and any customer impact. They are looking at how firms communicate with their customers. Firms must be able to keep up their customer focus despite many now working from home.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

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Our View

The current situation is very volatile. Firms need to keep abreast of events and regulatory requirements. ATEB can assist with this through our newsletters, website and our regular direct contact with our client firms.

Firms’ immediate focus should mirror that of the FCA, namely implementing the firm’s business continuity arrangements and tweaking these if required in the light of actual experience. Firms should also ensure that any outsourced services continue to operate as required.

Once those immediate actions are in place, firms will need to give detailed consideration on how they can continue to operate ‘business as usual’ in unusual circumstances. Some policies and processes will need to be amended and some created – for example, servicing clients on a non-face to face basis, at least temporarily.

ATEB can assist firms make the required changes.

Action Required By You

  • Contact ATEB for assistance and guidance in implementing ‘COVID-safe’ processes.
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Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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