In the week the FCA published its annual Business Plan, mapping out its priorities for the coming year, it also released welcomed guidance for firms on how they can continue serving customers in the thick of the Covid-19 crisis.

The speed read

  • Coronavirus crisis doesn’t guarantee suitability in DB pension transfers, says FCA
  • New ways of working for funds
  • Communicating with customers about market volatility
  • Implementation dates pushed back for new rules
  • Measures to support listed companies
  • PRA lowers minimum provisioning requirements for credit unions

Coronavirus crisis doesn’t guarantee suitability in DB pensions transfers, says FCA

The FCA has published a new webpage for pension providers and defined benefit (DB) transfer advisers in the light of Covid-19, covering:

  • Giving consumers pension information without inadvertently providing advice
  • Covid-19-related risk factors
  • Customers contacting providers to change and de-risk their investments
  • Providers contacting customers
  • The expectation of advisers giving DB pension transfer advice.

While the regulator is happy for advisers to continue providing advice on DB pension transfers, the risks of transferring should be clearly communicated to clients. Keep in mind that it’s unlikely a transfer is suitable, although clients may have misconceptions about this as a result of the Coronavirus crisis.

 

New ways of working for funds

The FCA has set out its expectations of funds in light of COVID-19. While it expects firms to comply with limits of value at risk (VaR) as part of their risk-limit systems, the FCA:

  • has agreed to allow funds to delay their annual and half-yearly fund reports
  • has no supervisory concerns over firms holding virtual general meetings, although fund managers must consider the terms of their fund documentation when making arrangements for online meetings
  • is willing to accept electronic signatures on applications to authorise funds or approve changes to funds on information sent by firms to the FCA

 

Communicating with customers about market volatility

New guidance for firms on how they can avoid straying into making personal recommendations when explaining the implications for customers of realising their investments or cancelling life assurance has been released by the FCA. Firms should ask customers for background information, and provides examples of communication which would not amount to the giving of a personal recommendation.

 

Implementation dates pushed back for new rules

The FCA has confirmed the deferral of a number of requirements including those relating to pensions transfers, investment pathways, platform switching and access to insurance.  Implementation dates will be pushed back for the rules set out in:

  • Policy Statement (PS19/29) Making transfers simpler – feedback to CP19/12 and final rules: deferral of implementation date from 31 July 2020 to 1 February 2021.
  • PS19/21 Retirement Outcomes Review: feedback on CP19/5 and final rules and guidance: deferral of implementation date to 1 February 2021.
  • PS18/20 Improving the quality of pension transfer advice: delay to the Pensions Transfer Specialist Qualification rules in this policy statement until 1 October 2021.
  • PS20/3 Signposting to travel insurance for consumers with medical conditions: the November 2020 start date for the signposting rules has been deferred, the FCA will update firms in due course.

 

Measures to support listed companies

The FCA announced a series of measures aimed at assisting companies to raise new share capital in response to the coronavirus crisis, while still ensuring investor protection. Measures include:

  • Providing clarity on the FCA’s expectations about the due diligence supporting ‘working capital statements’ in share prospectuses given the significant economic uncertainties caused by coronavirus.
  • The ability to apply to the FCA for waivers to ensure that shareholder approval can be sought for certain transactions without the need to hold a general meeting given government guidelines on social distancing.
  • Welcoming recent industry work on placings of new shares to agree sensible steps to balance the pre-emption rights of existing shareholders with the need for these transactions to be done as efficiently as possible given the economic environment.
  • Encouraging eligible companies to make use of the new simplified prospectus, introduced by the Prospectus Regulation last year. These prospectuses, recognising that the investor base has access to a range of information already relating to the issuer, remove the need to include information such as organisational structure, capital resources, remuneration and benefits and board practices.

The guidance is in application from 8th April, although the FCA is welcoming feedback on the measures and input on future action.

 

PRA lowers minimum provisioning requirements for credit unions

The PRA has sent a letter to all PRA-regulated credit unions regarding COVID-19. It covers:

  • Consent to a modification of Rule 3.11 of the Credit Unions Part of the PRA Rulebook on minimum provisioning requirements.
  • PRA’s supervisory approach and priorities for credit unions
  • Reiteration that the PRA will accept delayed submission for regulatory reports due on or before 31 May 2020.