Coronavirus (Covid-19): Information for firms

We are responding quickly to the financial implications of coronavirus to ensure customers are protected and markets continue to function well. We are working closely with the Government, the Bank of England, the Payment Systems Regulator and firms on this.

We have significant resources focused on our response, both for the firms we regulate and our colleagues. Dedicated teams have been set up and the situation is being overseen by our executive committee.

We continue to update this information for firms and expect to continue adapting our guidance as the coronavirus situation develops.

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Firms' responsibilities

Our rules give firms the ability to consider their arrangements and customers’ circumstances. We welcome firms reviewing their current arrangements to address the evolving situation while managing the risks to their employees, customers and the impact on the market.

We are in regular contact with firms to assess their current position, and expect firms to take reasonable steps to ensure they are prepared to meet the challenges coronavirus poses to customers and staff, particularly through their business continuity plans.

We expect firms to provide strong support and service to customers during this period. They should be clear and transparent and provide support as consumers and small businesses face challenges at this time.

We also expect firms to manage their financial resilience and actively manage their liquidity. Firms should report to us immediately if they believe they will be in difficulty.

Coronavirus is causing unprecedented levels of uncertainty in financial markets and there has been a surge in retail investor activity and new accounts being opened. Against this backdrop, firms are reminded of their MiFID II conduct of business obligations. ESMA has published a statement around the risks this poses to retail investors. If you are a retail investment firm experiencing unusual increases in new client onboarding, please read the statement.

Financial crime systems and controls

Maintaining the integrity of the financial market is a key objective for the FCA. In the current climate, it is important for firms to maintain effective systems and controls to prevent money laundering and terrorist financing.

We have set out our high-level expectations on the application of firms’ systems and controls for combatting and preventing financial crime. They focus on the importance of remaining vigilant to new or emerging threats, while also recognising that firms may need to re-prioritise or delay some activities according to the risk they pose. We have also provided links to other statements relevant to firms’ financial crime arrangements, for example remote client identification and verification, and submission of regulatory returns.

Motor finance and high-cost credit agreements: temporary guidance

On 24 April 2020, we announced another package of measures to support consumers facing payment difficulties due to coronavirus. The range of targeted temporary measures cover motor finance and high cost credit agreements including: high-cost short-term credit, buy-now-pay-later, rent-to-own and pawnbroking:

Our expectations of payment and retail banking firms

We are in regular contact with the industry, the Government and other regulators to understand the impact of coronavirus on the payments market.

We expect firms to manage the risks to consumers and to provide support to consumers and businesses during these challenging times. We have delayed or postponed work to enable firms to focus on this, and we are actively considering whether we should make further changes to regulatory or supervisory deliverables and expectations.

For more on the impact on strong customer authentication (SCA), please see the section on our SCA webpage for firms. This includes new information on contactless payments, e-commerce and online banking.

On retail banking, please see our statement on access to bank branches.

Safeguarding and prudential risk management: proposed additional guidance for payment services and e-money firms

On 22 May 2020, we announced a short consultation on additional guidance to strengthen payment services and e-money firms’ prudential risk management and safeguarding arrangements. The guidance will provide additional direction for firms to meet their requirements under the Electronic Money Regulations 2011 and Payment Services Regulations 2017, and it outlines the FCA’s expectation of firms to put in place more robust plans for winding-down, so that customer funds are returned in a timely manner if firms fail. 

The payments sector is a priority area for the FCA and the guidance is part of a broader programme of work that we were due to consult on later in the year. This has now been brought forward in light of the exceptional circumstances of the coronavirus pandemic. We still intend to consult more broadly on our expectations for the payments sector later in the year. Please consider our proposals and send us your comments by 5 June 2020, to the following e-mail address: [email protected].

Cross-border payments regulation

The EU Commission issued a statement on 9 April which reminds payment service providers of the forthcoming application date of 19 April for currency conversion transparency requirements. It recognises that applying these requirements in the current circumstances linked to the coronavirus crisis may pose some challenges and understands that National Competent Authorities may consider the necessity to enforce the new rules in a flexible manner.

We expect firms to comply with the requirements where they can, and if not, to implement these obligations as soon as possible. However, we will take a reasonable approach towards enforcement of the implementation of the new rules in the light of the need to preserve the stability and continuity of online payment services. That may mean assessing the immediate need to meet the new transparency obligations against the risk of introducing non-essential risk or a significant reduction in a firm’s capacity to deliver frontline services to customers in the present circumstances.

Regulatory reporting

We have introduced some temporary measures for firms submitting regulatory returns.

SM&CR responsibilities

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. There are existing responsibilities specified in the Senior Managers Regime (SMR), for example SMF24 for operational resilience and SMF2 for financial resilience.

Firms should review our statement on key workers on 20 March and our recommendation that the SMF1, or most relevant member of the senior management team, be responsible for their approach to key workers.

Impact on consumers

Our rules already provide flexibility to firms in a number of areas and we expect them to use this flexibility to support consumers, bearing in mind customers’ individual circumstances. For example, a number of firms have taken some steps to enable customers’ access to cash, such as waiving fees for individual savings accounts (ISAs) and allowing them to end their term deposits early.

We welcome firms taking initiatives going beyond usual business practices to support their customers. When doing so, firms should notify us so we can consider the impacts and offer support as appropriate. We have provided further information about access to restricted savings.

We know that coronavirus and the associated public health measures are causing many firms serious practical challenges, including in their operations dealing with consumer complaints. Find out about how firms should handle complaints during coronavirus.

Unsecured debt products

Our rules give firms the flexibility to act in the best interests of the customer. We welcome the steps firms have taken to offer support to customers and to encourage them to contact their bank or lender if they are experiencing financial difficulties. 

In the current climate, we want firms to show greater flexibility to customers in persistent credit card debt.

Under our rules, firms are required to take a series of escalating steps to help customers who are making low repayments over a long period. After 36 months of someone being in persistent debt the provider must offer options to help repay the debt more quickly. If customers do not respond within a period set by the firm the card must be suspended.

Given the challenges facing many customers at present we think they should be given more time, until 1 October 2020, to respond to firms’ communications. This means that firms would not be obliged by our rules to suspend the cards of non-responders before then.

This applies both to those who have already received communications from their provider and those that are yet to receive them.

We will be in touch with firms shortly to confirm details of this proposal.

Access to cash

We are working with the Bank of England and the Payment Systems Regulator to understand problems consumers may have accessing cash, and ensure the UK learns the lessons from other countries’ experience of coronavirus.

UK firms have taken steps to help ensure consumers have access to cash, including the raising of cash machine withdrawal limits.

We are confident electronic payment providers have capacity to cope with the potential changes in transaction numbers.

We recognise that a growing number of people may use online or phone banking services, in some cases for the first time. Firms should continue to help vulnerable consumers access their banking services – online or over the phone. Firms should also remind consumers to be aware of fraud and protect their personal data.

Mutual societies - including AGMs update

We’ve provided an update for mutual societies on general meetings. We’ve also provided an update for mutual societies on applications and annual returns.

General meetings

We are aware that some mutual societies are considering a number of options, including postponing scheduled member meetings, such as Annual General Meetings (AGMs). Societies are concerned that this could lead to them breaching their own rules or legislative requirements.

It is for societies to reach their own decision as to whether to go ahead with any planned meeting, taking into account any relevant Government guidance, their own individual circumstances and, where appropriate, legal advice. Societies should take reasonable steps to ensure they meet any obligations they are under as soon as reasonably practicable. Societies will want to consider alternative arrangements such as making use of video conferencing where permitted.

The rules of an individual society govern the relationship between a society and its members. It is important members are afforded the ability to exercise their rights under the rules of a society. Societies may want to take their own advice to consider any risks arising from action taken by members as a result of a breach of their own rules. The FCA has no role to play in determining disputes over society rules.

Where, following Government guidance, the postponement of a general meeting results in a breach of a legislative requirement, it may fall to the FCA to make a decision as registering authority as to what if any action we take. We do not consider it to be in the public interest for us to take action in this context where we can see that a society is taking steps to ensure they meet the legislative obligation as soon as reasonably practicable. Members of societies will, of course, retain the ability to take action in accordance with their rights under the rules of a society. 
 
For those societies that have listed securities, they should continue to consider and comply with their obligations under MAR and the relevant FCA listing rules.

Operational resilience

We expect all firms to have contingency plans to deal with major events and that the plans have been tested. Alongside the Bank we are actively reviewing the contingency plans of a wide range of firms. This includes firms’ assessments of operational risks, the ability of firms to continue to operate effectively and the steps firms are taking to serve and support their customers.

Firms should take all reasonable steps to meet the regulatory obligations which are in place to protect their consumers and maintain market integrity. For example, if a firm has to close a call centre – requiring staff to work from other locations (including their homes) – the firm should establish appropriate systems and controls to ensure it maintains appropriate records, including call recordings if required.

We will continue proactively discussing with firms and trade associations the issues they are facing, and we will be continuing our active dialogue with them in the coming days and weeks.

Our consultation paper sets out further information on operational resilience matters that firms should be considering.

Information security

Cyber criminals are increasingly exploiting coronavirus related themes for their own gain. In the UK, the NCSC (National Cyber Security Centre) has detected more UK Government branded scams relating to coronavirus than any other subject.

Operational disruptions (including cyber related incidents) can mean important business services are unavailable, have the potential to cause wide-reaching harm to consumers and market integrity, threaten the viability of firms and can cause instability in the financial system.

The exceptional circumstances introduced by coronavirus have required firms to change their ways of working at pace and have altered the threat landscape faced by many financial services organisations. As more organisations enable their employees to work from home, online systems are becoming increasingly mission critical and cyber criminals are exploiting the situation for their own gain.

While alternative ways of working may be needed to enable business continuity, we expect firms to prioritise information security and ensure that adequate controls are in place to manage cyber threats and respond to major incidents. Firms should look to implement enhanced monitoring to protect end points, information and firm critical processes, including network connections and video conferencing software.

We expect firms to proactively manage the increased risk during this unprecedented period. This includes:

  • being vigilant to the potential increase in security breaches or cyber attacks
  • ensuring that they continue to have appropriate governance and oversight arrangements
  • reviewing the impact of coronavirus on their information and systems security defences, and taking action as needed 
  • ensuring that the general notification requirements are followed, and significant operational/cyber incidents are reported

We are in regular contact with industry, the Government, trade associations and other regulators to understand the impact of coronavirus on firms’ operational resilience. In particular, we are working closely with industry to ensure that workarounds and continuity actions do not adversely impact firms’ information security controls and their ability to provide services to customers.

Please check the National Cyber Security Centre for advice on how to keep your organisation secure. To subscribe to up-to-date cyber threat information please see the Cyber Security Information Sharing Partnership (CiSP).

Market trading and reporting

As firms are moving to alternative sites and working from home arrangements, they must consider the broader control environment in these new circumstances.

Firms should continue to record calls, but we accept that some scenarios may emerge where this is not possible. Firms should make us aware if they are unable to meet these requirements. We expect firms to consider what steps they could take to mitigate outstanding risks if they are unable to comply with their obligations to record voice communications. This could include enhanced monitoring, or retrospective review once the situation has been resolved.

Firms may experience difficulties in submitting their regulatory data, in which case we expect them to maintain appropriate records during this period and submit the data as soon as possible. Firms should not unnecessarily delay these submissions. If firms have concerns, they should contact us as soon as possible.

Firms should continue to take all steps to prevent market abuse risks. This could include enhanced monitoring, or retrospective reviews. We will continue to monitor for market abuse and, if necessary, take action.

We note the recent statement from the European Securities & Markets Authority (ESMA) regarding upcoming changes to the tick size regime for certain firms, required by the EU Investment Firms Regulation. We support the statement. We will also not prioritise supervision of the new requirements at this time. We expect firms to focus on minimising the potential for operational disruption. We will keep this situation, and our position, under review.

On 27 May 2020, we published Primary Market Bulletin Issue No. 28 which provides an update on temporary relief for the timing of the publication of half yearly financial reports and statement on market practice on ‘going concern’ assessments and Market Watch 63: market conduct and discipline in the context of coronavirus

Professional qualification exams

Accredited bodies and other professional qualification providers are cancelling exams because of coronavirus with no specific arrangements in place to reschedule them. We expect this to have an impact on firms that must ensure their employees complete appropriate qualifications within a specific time limit, in line with FCA requirements.

During the period linked to the emergency, we still require firms to ensure that all employees have the skills, knowledge and expertise needed to discharge their responsibilities. However, we have no intention of taking action against a firm or accountable individual that is not able to ensure that an employee has attained an appropriate qualification within the required 48 months (TC 2.2A.1R) because the relevant examinations were cancelled or postponed. In these circumstances:

  • We will treat the time limit for attaining the appropriate qualification as ‘within 48 months or, where necessary, as soon as reasonably practicable afterwards, up to a further 12 months’ instead of ‘within 48 months’. Affected employees of the firm will, if needed, have an additional 12 months to complete the appropriate qualifications. Firms will need to assess and decide if an extension should be granted to an employee and record the reasons for this.
  • A firm’s affected employees include those employees that have a set (registered/booked) examination date(s) which was cancelled or postponed by the examination provider or by the firm. For example, because the employee is needed to carry out extra duties to manage risks, and/or to provide support, to consumers and businesses during these challenging times, and where it is not realistic to expect the employee also to fulfil the qualification requirement.

We will adopt this approach for 6 months, until 31 October 2020. This means that firms may apply a time limit of up to 60 months where examinations were cancelled or postponed, up to and including 31 October 2020.

Allowing individuals to carry over Continuing Professional Development (CPD)

During the current pandemic, we expect firms to continue to demonstrate that relevant individuals remain competent to carry out their work. But in these exceptional circumstances we are also allowing firms to defer individuals’ CPD to the next CPD year.

Accessing restricted savings

During the coronavirus crisis, consumers may find themselves needing access to their savings in accounts with restrictions on access. According to Citizens Advice nearly two in five (38%) people have seen their income decline, with nearly one in 12 (8%) losing 80% of their household income or more.

Research conducted by YouGov on behalf of the Standard Life Foundation also shows that one in five consumers (21%) has used some form of savings to make ends meet in recent weeks.

Data from the Financial Lives Survey suggests that several million people may have restricted savings as their only form of savings. If they cannot access their savings, they may be unable to cover essential outgoings, or need to take on additional debt instead. The YouGov/Standard Life Foundation research also found that 19% have used credit to make ends meet in recent weeks.

Customers may contact firms asking to withdraw funds from these accounts. As ever we would expect firms to:

  • pay due regard to the interests of their customers and treat them fairly (see Principle 6 and BCOBS 5.1)
  • communicate in a way that is clear, fair and not misleading (see Principle 7 and BCOBS 2.2), and
  • consider the needs of vulnerable customers in their actions or communications (see Principles 6 and 7).

Meeting these obligations does not require firms to offer access to all customers, or to offer unlimited access to funds in a restricted-access account. Firms are free to form a judgement on a case by case basis, balancing their customers’ needs with their own obligations, including managing their prudential risk.

However, in doing so, firms should also be aware that for some people the impact of coronavirus is likely to exacerbate the personal circumstances that can cause vulnerability. It may also cause consumers who would not normally think of themselves as vulnerable to suddenly face personal circumstances that can cause vulnerability, such as a sudden and significant loss of income.

In deciding how to respond to customers in a way that is consistent with the above obligations, firms should consider the customer’s vulnerabilities and the impact that an inability to access funds would have. Relevant factors that firms may want to consider in doing so include the reason for the request (for example, whether the withdrawn funds would be used to pay for essential goods and services), or the consumer’s access to other forms of income such as Universal Credit.

We welcome the steps several firms have already taken to allow access and to waive penalty fees or charges on restricted savings products. We will monitor customer demand for access through our contact centre engagement with consumers, and use our usual supervisory engagement with firms to understand how they are approaching the issue. We will keep the situation under review.

Page updates

03/06/2020: Information added Press reelase confirming guidance for insurance firms on assessing product value
02/06/2020: Information added Press release on support for customers who are struggling to pay their mortgage
28/05/2020: Information added Primary Market Bulletin 28 and Market Watch 63
27/05/2020: Information added Allowing individuals to carry over Continuing Professional Development (CPD)
22/05/2020: Information added Safeguarding and prudential risk management information
21/05/2020: Information added ESMA statement added to firms' responsibilities section
14/05/2020: Link added Latest news section press release confirming measures to help insurance customers
10/05/2020: Information added FCA update following the Prime Minister’s statement on Sunday 10 May
06/05/2020: Information added Financial crime systems and controls
06/05/2020: Information added Information security
05/05/2020: Information added Access to restricted savings
01/05/2020: Information added press release and statement on insuring SMEs: business interruption & package of measures
30/04/2020: Information added Strong customer authentication and coronavirus
28/04/2020: Information added Mutual societies AGMs update
24/04/2020: Information added Motor finance and high-cost credit agreements: temporary guidance
21/04/2020: Information added Professional qualification exams
17/04/2020: Information added Motor finance and high-cost credit agreements: draft temporary guidance
16/04/2020: Information added Cross-border payments regulation
08/04/2020: Information added Additional primary market measures news added
07/04/2020: Information added Pensions and retirement income, and investments and life assurance guidance
07/04/2020: Information added Updated Delays to publications list and published Delayed implementation of rules list
03/04/2020: Information added Pensions
02/04/2020: Information added Mutual societies
02/04/2020: Information added Temporary financial relief for customers: proposed guidance published
31/03/2020: Publication added Dear CEO letter: coronavirus update for firms providing services to retail investors
31/03/2020: Information added Our expectations of payment and retail banking firms
25/03/2020: Information added SM&CR responsibilities