The FCA expectations during the pandemic

16 July 2020

The FCA set out its expectations early on during the onset of the COVID-19 pandemic, ensuring treating customers fairly is high up on the agenda. Firms need to be clear and not misleading whenever they communicate with customers and also need to be fair and professional in how they deal with them.

Flexibility during the pandemic

The FCA rules give businesses the ability and flexibility to consider their arrangements and customers’ circumstances. The regulatory body is happy for firms to review their current arrangements to address the evolving situation, while, at the same time, managing the risks to their employees, customers, and the impact on the market.

Reasonable steps should be taken to ensure firms continue to meet the challenges the Coronavirus poses to customers and staff, particularly through their business continuity plans.

Consider customers vulnerability

Strong support and service to customers should continue to be provided and communications should be clear and transparent, with support provided as consumers and small businesses face challenges at this time.

It could be that some consumers have been put in a vulnerable position due to the Coronavirus. The FCA expects firms to consider very carefully the needs of their customers and show flexibility in their treatment of them. It would not expect to see their ability to claim impacted by circumstances over which they have little control. Also, policy exclusions should be clearly communicated what may impact the cover and use of individual policies.

Resilience matters

Brokers should manage their financial resilience and actively oversee their liquidity. If you believe you will be in any difficulty, you should report it to the FCA immediately.

Operational resilience is also key; this means firms should have contingency plans in place to prevent, adapt, respond to, recover, and learn from operational disruptions during this period.

Think about cyber crime

Cyber-crime is on the increase; criminals are using the Coronavirus as a way to challenge companies’ weaknesses for their own financial gain. Employees working from home has meant businesses have needed to change their ways of working quickly, which could have possibly increased the threat level.

While alternative working arrangements may be needed to enable business continuity, the FCA expects firms to prioritize information security and ensure that adequate controls are in place to manage any cyber threats and allow them to respond to major incidents. Enhanced monitoring should be observed to protect information and critical processes, including network connections and video conferencing software.

Be vigilant, have appropriate governance and oversight in place, review and improve your system security if necessary and evolve to protect your assets, detect breaches, respond to and recover from incidents.

Financial crime systems and controls are as important as ever, if not more so, as offenders continue to exploit the current crisis. It is important to maintain effective systems and controls to prevent any money laundering, fraud or terrorist financing.

In response to the Coronavirus, the FCA has confirmed it has delayed some non-critical publications, allowing firms some breathing space to focus on supporting their customers. These include vulnerability research and guidance, GI Pricing and a Consumer Credit Act review amongst others.

If you have any compliance questions, please speak your dedicated BDM, who will be happy to assist.

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