The Financial Conduct Authority (FCA) has issued guidance to financial services firms on operating during the coronavirus outbreak, including calling for increased flexibility for customers across both secured and unsecured debt.
The regulator said it is working closely with the government, the Bank of England, the Payment Systems Regulator and firms to ensure markets “continue to work well for consumers”.
It said it is in regular contact with firms to assess their preparedness, adding that it expects them to be looking at their business continuity plans.
The FCA said its rules gives firms the ability to consider their arrangements and customers’ circumstances. It encouraged firms to review their current arrangements to address the “evolving situation while managing the risks to their employees, customers and the impact on the market”.
“We… expect firms to be taking reasonable steps to ensure they are prepared to meet the challenges coronavirus could pose to customers and staff, particularly through their business continuity plans,” its notice said. “We expect firms to provide strong support and service to customers during this period.”
The FCA said it expects firms to have contingency plans to deal with major events and that the plans have been tested. Alongside the Bank of England, it is actively reviewing the contingency plans of a wide range of firms. This, it said, 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, it said, should take “all reasonable steps” to meet the regulatory obligations.
For example, if a firm has to close a call centre – requiring staff to work from other locations – the firm should establish appropriate systems and controls to ensure it maintains appropriate records. Its rules are not specific in respect of call recording in such situations.
The regulator reiterated its call for firms manage their financial resilience and actively manage their liquidity.
“Firms should report to us immediately if they believe they will be in difficulty,” it said.
Meanwhile, the regulator said it would “delay or postpone” regulatory activity which is not critical to protecting consumers and market integrity in the short-term.
In terms of impact on customers, the FCA said 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 were encouraged.
“We still expect firms to deal with complaints promptly,” it said. “However, where the pandemic prevents this firms should contact us; we understand the pressures firms will be under.”
The FCA said it is “encouraged” by the actions of some lenders in granting flexibility on mortgage payments as a way of protecting consumers. It added it will be discussing with the industry and updating approaches mortgage providers may take to assisting their customers “in the coming days”.
Given the current climate, the FCA wants firms to show “greater flexibility” to customers in persistent credit card debt.
Under its rules, firms are required to take a series of escalating steps to help customers who are making low repayments over a long period. After 36 months of someone being in persistent debt, the provider must offer options to help repay the debt more quickly. If customers do not respond within a period set by the firm, the card must be suspended.
The FCA is now proposing customers be given more time, until October 1, 2020, to respond to firms’ communications. This means that firms would not be obliged by our rules to suspend the cards of non-responders before then.
This applies both to those who have already received communications from their provider and those that are yet to receive them.
Access to cash
On accessing cash, the FCA said the UK must “learn from other countries’ experiences” of coronavirus.
Some banks have already raised the limits of cash machine withdrawals.
The FCA added 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.