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Thornbridge Regulatory Update – May 2020

Welcome to the May edition of our regulatory update, which aims to pull together various regulatory developments and their implications for Appointed Representatives and other firms operating in the regulated space.

Coronavirus (Covid-19)

The FCA’s highest priority has been, and continues to be, dealing with the implications of the pandemic quickly and effectively. This has meant intervening at speed where they can make a difference, focusing on supporting consumers facing difficulties, and giving firms the regulatory environment to concentrate on serving customers.

Most recently, the FCA have proposed a series of measures to support both consumers and businesses who hold insurance products and who are facing issues as a result of coronavirus. This is the latest in a series of updates to their rules and guidance to help firms better support their affected customers. In April alone, they have introduced temporary measures:

Key workers in financial services

The Government and the Devolved Administrations have recently expanded coronavirus testing in England, Wales and Northern Ireland. Testing now includes essential workers with symptoms who are self-isolating to help them return to work if they test negative. The advice includes the same definition of essential workers announced in March and reflected in their statement, so only those workers in the definition qualify for testing at this time.

Wet-ink signatures

The FCA published a statement on 20 April setting out their expectations in relation to wet-ink signatures.

Professional qualifications exams

The FCA know the current situation is having an impact on firms that must ensure their employees complete appropriate qualifications within a specific time limit, in line with their requirements. They’ve published information on their expectations on completing professional qualifications in light of the pandemic.

Regulatory reporting changes

Given the impact of coronavirus, the FCA have introduced some temporary measures for firms submitting regulatory returns. They will allow flexibility on the submission deadlines for specific returns. This applies to submissions that are due up to and including 30 June 2020, and the Employers’ Liability Register compliance return due in August. All other returns must be submitted in the usual timeframe. For small or medium-sized businesses, they will not charge the administrative fee for late returns until 30 June 2020. They still expect you to submit your return as soon as possible and will send you a reminder letter if you miss a deadline.

FCA seeks legal clarity on business interruption insurance claims

The FCA have announced their intention to obtain a court declaration to resolve contractual uncertainty in business interruption (BI) insurance cover. This is due to continuing concerns about the lack of clarity and certainty for some customers making BI claims, and the basis on which some firms are making decisions in relation to claims.

They will be seeking clarification from firms as to whether they are declining, or intend to decline claims. They expect impacted firms to clarify their position as to whether they believe their policy wordings for BI losses arising other than from property damage provide cover, by 15 May.

New measures to help insurance customers and small businesses impacted by coronavirus

The FCA have proposed a series of measures to support both consumers and businesses who hold insurance products and who are facing issues as a result of coronavirus.

The additional guidance proposals set out their expectations that insurance firms should consider whether their products still offer value to customers and whether they can be doing more for those suffering a financial impact because of the virus.

Financial Advisers

Professional indemnity insurance (PII)

Some firms are concerned that the current situation may make it harder to renew their PII in a timely manner. The FCA’s discussions with insurers and brokers indicate that the crisis is not preventing insurers from undertaking the renewals process. They have published their position which remains that firms need to have PII policies in place in accordance with their rules. Where an individual firm is worried it will be unable to secure appropriate PII cover, including at the point of renewal, it should notify us in their usual way.

Complaints handling

They know that many firms’ capacity to handle complaints is likely to be affected by coronavirus. They have published a further statement about complaint handling (including PPI) outlining:

  • What firms should do if their complaint handling is delayed. This includes prioritising complaints from vulnerable consumers, micro-enterprises and small businesses, as well as payments to customers who have already accepted offers of redress.
  • The Financial Ombudsman Service’s general approach, and
  • Information for consumers and Claims Management Companies, asking them to give firms a reasonable amount of extra time to respond to complaints.

They will review and update this statement in 3 months’ time.

Wealth Managers

Complaints handling

They know that many firms’ capacity to handle complaints is likely to be affected by coronavirus. They have published a further statement about complaint handling (including PPI) outlining:

  • What firms should do if their complaint handling is delayed. This includes prioritising complaints from vulnerable consumers, micro-enterprises and small businesses, as well as payments to customers who have already accepted offers of redress.
  • The Financial Ombudsman Service’s general approach, and
  • Information for consumers and Claims Management Companies, asking them to give firms a reasonable amount of extra time to respond to complaints.

They will review and update this statement in 3 months’ time.

Investment Managers

Publishing fund reports and accounts in light of Coronavirus

On 6 April, the FCA published a webpage on temporary relief for managers of UK UCITS and NURS from the usual timeframes for publishing certain reports and accounts.

On 22 April, they updated this temporary relief to cover managers of some other funds. The relief gives those managers extra time to publish their funds’ annual reports and, for managers of QIS, also their assessment of value reports.

They expect fund managers to publish reports on time, if they can publish within the usual time limits without compromising the quality of the reporting and in line with the current health guidelines.

FCA expectations on funds in light of Coronavirus

Firms have asked us about complying with their rules on funds in the context of coronavirus.

On 6 April, they set out their answers to initial questions on their webpage. They subsequently updated their webpage on 15 April and 22 April to cover additional queries.

They expect firms to continue to act in the interests of the funds they manage and the investors in those funds at all times.

Complaints handling

They know that many firms’ capacity to handle complaints is likely to be affected by coronavirus. They have published a further statement about complaint handling (including PPI) outlining:

  • What firms should do if their complaint handling is delayed. This includes prioritising complaints from vulnerable consumers, micro-enterprises and small businesses, as well as payments to customers who have already accepted offers of redress.
  • The Financial Ombudsman Service’s general approach, and
  • Information for consumers and Claims Management Companies, asking them to give firms a reasonable amount of extra time to respond to complaints.

They will review and update this statement in 3 months’ time.

Brexit

The UK left the EU on 31 January 2020 and has entered a transition period, which is due to end on 31 December 2020. Find out what this means for firms and consumers on their Brexit pages.

Trade Repositories (TRs) registration for UK SFTR

On 30 April 2020, the Treasury confirmed that they intended to bring forward legislation before the end of the transition period which will be similar to the Trade Repositories Regulations.

It will allow TRs who wish to offer services under the UK Securities Financing Transactions Regulation (SFTR) to register with the FCA, or apply in advance, and operate in the UK immediately after the end of the transition period.

They will provide further details, including draft application forms in due course.

Temporary Transitional Power (TTP)

The FCA has confirmed that after the transition period, they intend to apply the TTP on a broad basis and to the same areas previously communicated. They intend to grant transitional relief from the end of the transition period until 31 March 2022. There are specific areas where they will not grant transitional relief. In these areas, they continue to expect firms and other regulated entities to take reasonable steps to comply with the changes to their regulatory obligations by the end of the transition period. For further information see here.

 

If you would like to read previous regulation updates, we’ve compiled a regulation update for:

March 2020 Regulation Update

January 2020 Regulation Update

 

Disclaimer

The contents of this document are taken from the Financial Conduct Authority’s (“FCA”) May 1st 2020 regulation round up communication and are communicated by, and the property of, Thornbridge. Thornbridge is a trading name of Thornbridge Investment Management LLP which is authorised and regulated by the Financial Conduct Authority.

The information and opinions contained in this document are subject to updating and verification and may be subject to amendment. No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained in this document by Thornbridge Investment Management LLP or its directors. No liability is accepted by such persons for the accuracy or completeness of any information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained in this document.