The speed read

  • ESMA confirms ongoing CRAs supervision
  • FCA guidelines on handling post and paper documents
  • Government announces Trade Credit Insurance guarantee
  • Support for insurance customers in financial difficulty
  • FCA updates webpage on innovation support
  • Exemptions in the Corporate Insolvency and Governance Bill
  • Withdrawal charge on Lifetime ISA’s officially reduced
  • FCA work on BI ahead of upcoming High Court test case

ESMA confirms ongoing CRAs supervision

The European Securities and Markets Authority (ESMA) updated its COVID-19 webpage to include a new section on the supervision of Credit Rating Agencies (CRAs). ESMA confirms that it is continuously engaging with CRAs to assess the impact of COVID-19 on their businesses and operations, focusing on business continuity and adherence by CRAs to key requirements of the CRA Regulation. ESMA is also closely monitoring CRAs’ rating actions through enhanced data analytics to assess the possible impact of ratings actions on financial stability.

 

Handling of post and paper documents

The FCA has published a statement outlining its expectations on how firms should handle paper and post documents. The statement confirms that:

  • If firms cannot comply with requirements for post and paper-based processes, incoming and outgoing, they should notify the FCA as soon as possible at queries@fca.org.uk
  • Firms should try to ensure that all customers are not disadvantaged because of delays and make particular efforts to contact customers who do not use online services
  • Firms should demonstrate to the FCA any steps they have taken to mitigate the impact of non-compliance with postal and paper processes and then return to full compliance as soon as practical
  • Firms should use their websites and other channels (such as social media) to keep customers informed
  • Firms should use other methods to conduct suitability assessments, such as phone calls and relevant due diligence checks online
  • Firms should ask those who have sent instructions or cheques which have not been processed to contact the firm urgently by telephone or electronic means.

The FCA confirms that the arrangements above will be reviewed as the coronavirus pandemic develops. But firms should comply with the requirements as soon as reasonably practicable, and not wait on a further statement from the FCA.

 

Government announces Trade Credit Insurance guarantee

HM Treasury (HMT) announced that the Government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance (TCI). The guarantee will be delivered through a temporary reinsurance agreement with insurers currently operating in the market, and will provisionally last until the end of 2020. This will be followed by a review of the TCI market to ensure it can continue to support businesses in future. HMT confirms further details will be announced in due course.

 

Support for insurance customers in financial difficulty

Following the consultation paper published on 1 May 2020, the FCA has confirmed a series of temporary measures to help insurance and premium finance customers who may be in financial difficulty because of coronavirus.

The targeted measures being implemented require firms to consider what options they can provide to customers including:

  • Reassessing the risk profile of customers. This may have changed because of coronavirus and there may be scope to offer customers materially lower premiums.
  • Considering whether there are other products they can offer which would better meet the customer’s needs and revise the cover accordingly. For example, a motor insurance customer might no longer need associated add on cover such as key cover or could be moved from fully comprehensive cover to third party fire and theft.
  • Waiving cancellation and other fees associated with adjusting customers’ policies.

The measures will come into force on Monday 18 May 2020. They will be reviewed in the next 3 months in the light of developments regarding coronavirus and may be revised if appropriate.

FCA Handbook COVID-19 Premium Finance Instrument 2020 (FCA 2020/20) has also been published.

 

FCA updates webpage on innovation support

The FCA updated its webpage entitled ‘Request Innovation Hub support’ and added a section on COVID-19. The FCA is particularly interested in firms that want to help people and the financial system to deal with the effects of the COVID-19 outbreak. The FCA will consider any credible proposals and innovative financial services ventures intended to:

  • Improve access to credit or funding for consumers or small businesses
  • Help individuals or companies to access cash, charitable donations, government aid or other financial help
  • Help distribute funds or other forms of support during periods of isolation
  • Help improve the speed or efficiency in assessment and resolution of insurance claims
  • Help firms identify their vulnerable customers
  • Improve the identification of scams from, for example, phishing or push payment fraud.

The FCA expects the proposals/tools presented to be innovative and show clear consumer benefit.

 

Exemptions in the Corporate Insolvency and Governance Bill

The FCA published a statement regarding the financial services exemptions in the forthcoming Corporate Insolvency and Governance Bill, sponsored by the Department for Business, Energy and Industrial Strategy (BEIS). The statement details the measures contained in the legislation and highlights where the measures may not be available to some financial services firms and contracts in order to preserve the special insolvency regime for financial sector firms.

 

Withdrawal charge on Lifetime ISA’s officially reduced

The Statutory Instrument Individual Savings Account (Amendment No. 3) (Coronavirus) Regulations 2020 (SI 2020/506) (with explanatory memorandum) which provides for the withdrawal charge in respect of a Lifetime ISA for the period of 6 March 2020 to 5 April 2021 to be reduced from 25% to 20% has been made.

 

FCA work on BI ahead of upcoming High Court test case

Ahead of its High Court test case, the FCA has called on policyholders and insurance intermediaries to submit information about any unresolved disputes with insurers over the terms of business interruption (BI) policies in relation to Covid-19. Responses are requested by 20 May 2020. The FCA confirms it will treat all information received as confidential and covered by the FCA’s litigation privilege.

The FCA has also published a new webpage detailing its work on BI, which it will update with information on what they’ve done and are doing. This includes an invitation for policyholders with unresolved disputes to submit their arguments.