On 31 March 2020, the FCA (Financial Conduct Authority) issued a ‘Dear CEO’ letter directed at firms providing services to retail investors (such as financial advisers, life insurance and pension providers, wealth managers, private banks and stockbrokers), but some points are of more general application.
The FCA has set out the initial measures it has taken to reprioritise and deprioritise its regulatory work in light of the COVID-19 pandemic, including how it has approached the various requests from firms and trade associations for changes to its regulatory approach during this challenging time.
The FCA explained that:
The FCA warns that any opportunistic requests designed to undermine consumer protection will effectively provide the FCA with useful intelligence about the firms involved or conduct in the sector.
Firms and trade associations would be wise to consider carefully any proposed requests – in particular in the light of the new obligations and standards expected under the Senior Managers and Certification Regime (SMCR).
The FCA also signposts to its brief guidance on financial resilience and prudential issues, and clarifies that Government schemes can be used to help firms plan for how they will meet debts as they fall due and help firms remain solvent in the immediate period, but Government loans cannot be used to meet capital adequacy requirements as they do not meet the definition of capital.
There is a brief update on FCA Policy and implementation, in particular in relation to investment pathways and platform switching provisions, and its work on defined benefit transfer advice (which is continuing).
We suggest that firms diarise any dates that are relevant to them and keep in mind their ongoing obligations under the Principles for Businesses, in particular their relations with the regulator (Principle 11).
The FCA reiterates that it expects firms to:
If you would like to discuss any of the issues raised in this article, or have other concerns about the impact of Coronavirus, please contact Katharine Everett Nunns or Jonathan Kitchin in Michelmores Finance & Investment team.
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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.