Coronavirus (Covid-19): Information for firms

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.

Credit cards (including store cards and catalogue credit), personal loans, overdrafts, motor finance and high cost credit agreements: updated guidance

On 30 September 2020, we confirmed the next steps of support for consumers with overdrafts and consumer credit products. This includes what support may be needed for consumers who have already made use of our temporary guidance but are still in financial difficulty. 

On 15 July 2020, we confirmed further measures to support users of other consumer credit products facing payment difficulties due to coronavirus. These measures covered motor finance and high cost credit agreements including high-cost short-term credit, buy-now-pay-later, rent-to-own and pawnbroking:

• Motor finance agreements and coronavirus: updated temporary guidance for firms 
• High-cost short-term credit agreements and coronavirus: updated temporary guidance for firms
• Rent-to-own, buy-now pay-later and pawnbroking agreements and coronavirus: updated temporary guidance for firms
• FS20/11: Further support for consumers impacted by coronavirus: feedback on draft guidance and rules (motor finance, high-cost short-term credit, rent-to-own, buy-now pay-later and pawnbroking)

On 1 July 2020, we confirmed further support to help people facing payment difficulties due to coronavirus with some of the most commonly used consumer credit products. These measures cover credit cards (including store cards and catalogue credit), personal loans and overdrafts. For the users of these consumer credit products we've published updated guidance:

• Credit cards (including retail revolving credit) and coronavirus: updated temporary guidance for firms
• Personal loans and coronavirus: updated temporary guidance for firms
• Overdrafts and coronavirus: updated temporary guidance for firms
• FS20/9: Further support for consumers impacted by coronavirus: feedback on draft guidance and rules (personal loans, credit cards and overdrafts)

On 24 April 2020, we first confirmed a package of measures to support consumers using these consumer credit products:

• Motor finance agreements and coronavirus: temporary guidance for firms
• Rent-to-own, buy-now pay-later and pawnbroking agreements and coronavirus: temporary guidance for firms
• High-cost short-term credit and coronavirus: temporary guidance for firms
• FS20/4: Temporary financial relief for consumers impacted by coronavirus: feedback on draft guidance and rules (motor finance and high cost credit)

On 9 April 2020 we first confirmed a package of temporary measures to help users of these consumer credit products:

• Credit cards (including retail revolving credit) and coronavirus: temporary guidance for firms
• Personal loans and coronavirus: temporary guidance for firms
• Overdrafts and coronavirus: temporary guidance for firms
• FS20/3: Temporary financial relief for consumers impacted by coronavirus: feedback on draft guidance and rules

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: additional guidance for payment services and e-money firms

On 9 July, we published additional guidance to strengthen payment services and e-money firms’ prudential risk management and safeguarding arrangements. The guidance provides additional direction for firms to meet their requirements under the Electronic Money Regulations 2011 and Payment Services Regulations 2017, and it outlines our 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 us and the guidance is part of a broader programme of work that we were due to consult on later in the year. This was 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. 

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 announced further temporary measures for firms submitting regulatory returns. This applies to submissions that are due up to and including 30 September 2020. All other returns must be submitted in the usual timeframe. For small or medium-sized businesses, we will not charge the administrative fee for late returns until 30 September 2020. We still expect you to submit your return as soon as possible and will send you a reminder letter if you miss a deadline.

Find out more about our 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.

Read more about the SM&CR for solo-regulated and dual-regulated firms.

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.

Handling consumer claims and refund requests

When handling claims, insurers must treat customers fairly. In part, this means providing reasonable guidance to help a policyholder make a claim, not unreasonably rejecting a claim and settling claims promptly. Insurers will also understand that the coronavirus pandemic is a stressful time for some customers and we expect them to take this into account when dealing with claims. For example, some customers submitting a travel insurance claim might also have a right to claim the cost of cancelled travel arrangements from their credit card provider. Where this is the case, insurers should consider how best to handle the claim to ensure that the customer is treated fairly and not raise unreasonable barriers to making a claim. 

Where consumers have two potentially valid avenues of redress against regulated firms (eg from an insurer and credit provider) there is nothing in our rules that stops an insurer, credit provider or other regulated firm settling the claim in full (so long as there is no disadvantage to the consumer in this) and, where appropriate, seek to claim back from the other firm involved. Firms can also agree a convention with the other provider as to how these sorts of arrangements might work efficiently without having a negative impact on consumers. Regulated firms may need to consider issues such as any limits on recovery, for example, limits on insurance cover in these arrangements and how those can be addressed to minimise harm to consumers. Historically, this has not been a significant issue for consumers. But, given the current strain on the travel market the complexity involved in getting a refund has become clearer.

On 2 October 2020, we published temporary finalised guidance outlining our expectations of firms when helping customers who are trying to claim money back following a cancelled trip or event. We also published feedback received from the Guidance Consultation we published on 31 July, where we received responses from a mix of firms, trade bodies, and consumer organisations.

Unsecured debt products – persistent credit card debt

Under our rules, firms are required to take a series of escalating steps to help customers who are making low credit card repayments over a long period. After 36 months of a customer being in persistent debt (PD36) the firm must offer the customer options to help repay the debt more quickly. If customers do not respond to the PD36 communication within a reasonable period set by the firm, the card must be suspended.

In March 2020, we updated our website setting out an expectation (in light of the effect of coronavirus on customers) that firms should show greater flexibility to customers who had been in persistent credit card debt for 36 months.

We said that credit card firms should give these customers until 1 October 2020 to respond to firms’ PD36 communications. This meant that firms were not required to suspend the cards of non-responders before then. This expectation applied both to those who had already received communications from their provider and those that were yet to receive them.

For those customers who are yet to receive a PD36 communication, firms can now decide what is a reasonable period of time to give these customers to respond to a PD36 communication. This should not be earlier than 1 October.

Payment deferrals and PD36 communications

For those customers granted a payment deferral under our credit cards and coronavirus temporary guidance for firms which we first published in April and updated in July, firms should take account of the disapplication of the persistent debt rules to customers granted a payment deferral, for the duration of any payment deferral granted.

When the provisions start to apply again after the payment deferral period, as we set out in the guidance, firms should take account of the duration of any payment deferral when considering what is a reasonable period within which the customer should be requested to respond to the PD36 communication.

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.

Open-ended funds review survey 

We’ve launched a survey for the joint Bank of England and FCA review of liquidity mismatch in open-ended funds.

In Q4 2019, the Financial Policy Committee (FPC) judged that the mismatch between redemption terms and the liquidity of some funds’ assets could become a systemic risk. It said there should be greater consistency between these, with specific focus on 3 principles: measures of liquidity, pricing, and redemption notice period. 

The review will carefully consider how a framework around these principles could be designed. 

As part of our ongoing joint review with the Bank, the FPC supported an initial data collection survey in Q1 2020. This survey was postponed in March due to the coronavirus (Covid-19) pandemic, however, the FPC recently supported resuming this work.

This is a voluntary exercise and the data will provide an important element for the joint review. Asset managers included in this survey are being asked to respond to the questions on a best-effort basis by 30 September 2020.

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.