The novel Coronavirus (“COVID-19”) has already had a global impact and will continue to have significant implications on the global financial services industry. With this in mind, the UK Financial Conduct Authority (“FCA”) has issued various communications in order to emphasise the need for business continuity at financial services firms and guidance on how to ensure that is the case.

In its recent statement of 17 March 2020 the FCA confirms that it remains focused on business continuity plans for financial institutions and will expect regulated firms to take all reasonable steps to continue meeting their regulatory obligations. Firms will be expected to have in place have contingency plans to deal with major events and while the FCA accepts that in the current climate, certain regulatory requirements may not always be met, firms are still expected to maintain appropriate records and make the necessary reports during this period. Firms should be ready to discuss with the FCA if there are concerns that their regulatory obligations may not be met.

The FCA sets out certain guidance and alerts for firms within specific industry sectors in relation to COVID-19, which includes:

  • Insurance: The FCA has set out its specific expectations for general insurance firms during the COVID-19 pandemic. The FCA’s guidance applies to various insurance firms and consumers in relation to travel, motor and home, and private medical insurance. The FCA has also provided clarification in relation to suspension of products and policy renewals.
  • Mortgage providers and lenders: The FCA published new guidance for mortgage lenders and administrators, and small business lenders. The guidance, amongst other things, makes clear that mortgage firms should:
    • grant customers a payment holiday for an initial period of 3 months, where they may experience payment difficulties as a result of COVID-19 and where they have indicated they wish to receive one; and
    • ensure that there is no additional fee or charge (other than additional interest) as a result of the payment holiday.
  • Consumers: The FCA published a specific update on its website supporting consumers during the COVID-19 pandemic. This includes advice and steps that consumers should be taking.
  • Key workers in financial services: The FCA published some guidance on its website to help firms identify key workers at financial services firms, being those workers who fulfil a role which is necessary for the firm to continue to provide essential daily financial services to consumers, or to ensure the continued functioning of markets.
  • Functioning of financial markets: The FCA published a statement on its website in which it reiterated its commitment to working with its international counterparts to ensure the orderly functioning of financial markets, despite recent volatility caused by COVID-19.

With the recent FCA commentary in mind, regulated firms should focus on business continuity and smooth functioning of their businesses in the wake of COVID-19’s impact. In particular, firms should:

  • consider whether their key service providers have appropriate business continuity plans in place and are equipped to provide services through the crisis. Firms should liaise with key service providers to confirm they have robust business continuity procedures in place to ensure minimal disruption;
  • firms should be proactive to discuss the impact of any delays to regulatory matters such as reporting, for example, and be transparent with the FCA;
  • firms should establish firm wide response plans to issues caused by employees being unable to attend the office – they should ensure they understand their employers’ legal obligations and establish firm positions on matters such as remote working, for example; and
  • firms should ensure that they continue to deal with customers in a way which is fair, clear and not misleading.

Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

Photo of Kirsten E. Lapham Kirsten E. Lapham

Kirsten Lapham is a partner specialising in financial services regulation. She advises a broad range of both institutional and individual clients on a variety of financial services regulatory and compliance issues. Her practice has a specific emphasis on the regulatory issues arising under…

Kirsten Lapham is a partner specialising in financial services regulation. She advises a broad range of both institutional and individual clients on a variety of financial services regulatory and compliance issues. Her practice has a specific emphasis on the regulatory issues arising under the AIFMD, and MiFID II for a range of EU and indirectly impacted firms outside of the EU.

Experience in this area includes advising multiple clients on the EU marketing and registration regimes and overlaying local regulatory considerations, such as the U.K. retail distribution review and Financial Promotion regime. Kirsten has also worked on MIFID II implementation projects and provided ongoing support for well-known asset managers and advised multiple clients on re-papering arrangements under the Directive. Kirsten also routinely advises on the regulatory issues that impact M&A transactions. She has represented some of the largest and most well-known alternative investment managers, including: TPG; PIMCO; Citi Private Bank; Dragoneer Investment Group; and a number of US and UK boutiques among many others.

Photo of John Verwey John Verwey

John Verwey is a partner in the Corporate Department and a member of the Private Funds Group.

John advises on a wide number of regulatory issues at a national UK and European level, including firm authorisations, change in control, market abuse, Electronic Money…

John Verwey is a partner in the Corporate Department and a member of the Private Funds Group.

John advises on a wide number of regulatory issues at a national UK and European level, including firm authorisations, change in control, market abuse, Electronic Money Regulations, Payment Services Regulations and client money rules. He represents a variety of clients that range from private equity firms and insurance intermediaries to global investment banks and sovereign wealth funds.

Photo of Amar Unadkat Amar Unadkat

Amar Unadkat is an associate in the Corporate Department and a member of the Private Funds Group.

Amar advises on a variety of regulatory issues both from a UK and European perspective, including the implementation of the AIFMD, MiFID II and the PRIIPs…

Amar Unadkat is an associate in the Corporate Department and a member of the Private Funds Group.

Amar advises on a variety of regulatory issues both from a UK and European perspective, including the implementation of the AIFMD, MiFID II and the PRIIPs Regulation. His clients include private equity firms, investment managers, FinTech companies, wealth management businesses, banks and sovereign wealth funds.