The speed read

  • Breathing space for solo-regulated firms on SMCR implementation
  • How is the FCA helping firms apply the APR?
  • Transcripts from BI insurance test case released
  • Access to cash during Covid-19
  • Supervising the new normal
  • How are payment and e-money firms safeguarding customers' funds
  • PRA consults on extension of FSCS
  • PRA guidance on disclosure elements of EBA’s reporting guidelines
  • Which FCA activities and publications have been delayed?

Some breathing space for solo-regulated firms on SMCR implementation

The deadline for solo-regulated firms to have undertaken the first assessment of the fitness and propriety of their Certified Persons under the Senior Managers & Certification Regime (SMCR) has been extended, from 9 December 2020 until 31 March 2021. This extension aims to give firms significantly affected by Covid-19 time to make the changes they need.

The FCA will still publish details of certified employees of solo-regulated firms on the financial services register, starting from 9 December 2020. Where firms can provide this information before March 2021, they are encouraged to do so.

 

How is the FCA helping firms apply the APR?

The FCA set out what it’s doing to help benchmark administrators and firms using Appointed Representative (AR) arrangements apply the Approved Persons Regime (APR) during Covid-19. The statement confirms that:

  • The FCA intends to relax temporary arrangements for controlled functions (the 12-week rule), and allow temporary arrangements for up to 36 weeks.
  • Furloughed approved persons can retain their approval during their absence and will not need to be re-approved by the FCA when they return.
  • The FCA does not expect firms to notify it under Form D of the temporary arrangements, but it does expect the arrangements to be clearly documented internally.
  • Regulated firms that use appointed representatives to carry on regulated activity remain responsible for their appointed representatives and networks meeting the FCA’s rules.

 

Transcripts from BI insurance test case released

As the BI insurance test case progresses, the FCA has published a draft transcript of the second Case Management Conference, which took place on 26 June 2020. The regulator has also released its reply to the insurers’ defences, confirming that since 24 June 2020, it has received more than 90 detailed submissions from policyholders and other stakeholders on the defences, and has considered these when drafting the reply.

 

Access to cash during Covid-19

The FCA has published a statement on its joint work with the Payment Systems Regulator (PSR) on identifying and managing access to cash during Covid-19. The statement follows the earlier FCA/PSR joint statement, and confirms that ensuring access to cash remains a priority for the FCA and PSR.

The PSR has also published two statements on: identifying and managing temporary gaps in access to cash during Covid-19; and the coverage of access cash across the UK.

Supervising the new normal

The European Central Bank published a blog entitled ‘supervising the new normal’. The blog considers effective supervisory engagement with banks during Covid-19 and aspects of focus for the European banking sector in the medium term.

 

Finalised guidance for payment and e-money firms on safeguarding customers’ funds

The FCA has published its finalised guidance for payment and e-money firms on strengthening firms’ prudential risk management and arrangements for safeguarding customers’ funds during Covid-19. The guidance incorporates its feedback statement (FS20/10) following its recent consultation paper on the topic, and aims to clarify ways that firms can comply with the requirements under the Electronic Money Regulations 2011 and Payment Services Regulations 2017 and help prevent potential harm to their customers in the event of insolvency during Covid-19.

The FCA hopes to conduct a full consultation later in 2020/21 on changes to its approach document, which is likely to propose incorporating this additional guidance.

PRA consults on extension of FSCS

On 9 July, the PRA published a consultation paper (CP6/20) on its proposal to extend coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balances (THBs), from six months to twelve months from the date of deposit, or the first date the THB becomes legally transferable to the depositor. The proposed extension of coverage would be for a temporary period, and is being proposed in response to the impact of Covid-19 on residential property and investment markets, and access to banking services for some depositors. THB coverage would revert back to six months from 1 February 2021. Responses are requested by 23 July 2020.

 

PRA guidance on disclosure elements of EBA guidelines on reporting

On 10 July, the PRA updated its guidance for PRA-regulated firms on the implementation of the European Banking Authority’s (EBA’s) guidelines on reporting data and public information during Covid-19 to include further information on the disclosure element of the guidelines.

The PRA expects that UK banks and building societies which: (i) are, or are controlled by, global or other systemically important institutions designated by the PRA in the most recent list; and (ii) have retail deposits equal to or greater than £50 billion on an individual or consolidated basis, should make disclosures similar to those prescribed by the EBA guidelines, but incorporating a number of modifications that the PRA will set out in due course.

The PRA also realises there may be practical difficulties caused by the publication of the EBA guidelines and templates, and does not expect that firms include these disclosures in the main Pillar 3 disclosures made for the 30 June 2020 reporting period, provided any subsequent delay be no longer than necessary.

 

Which FCA activities and publications have been delayed?

The FCA has updated its lists of delayed activities and regulatory change in light of Covid-19.

Changes to the “Other delayed publications” section of the webpage since the earlier 21 May update include:

  • Joint PRA-FCA work with the Climate Financial Risk Forum (CFRF) to develop industry led guidance on how to integrate climate related risks into business decision making across the financial services sector – amended from Q2 to Q3/2020
  • Vulnerability Guidance and Vulnerability Research – amended from Q2 to H2/2020
  • Consultation paper (CP) on mortgage switching – amended from Q2 to H2/2020; with a second entry with the same title scheduled for 2021
  • CP on the FCA’s approach to market integrity and wholesale markets – amended from Q2 to H2/2020, with a second entry with the same title scheduled as TBC
  • CP on investment platforms exit fees – amended from Q2 to H2/2020, with an addition to the list of a CP on investment platforms targeted for 2021
  • CP on aligning FCA guidance on selective disclosure with case law – amended from Q2 to H2/2020
  • Publication on options to change the regulatory framework following the duty of care feedback statement – amended from Q3 to H2/2020
  • CP on joint principles and new consumer duty – amended from Q3 to H2/2020
  • CP on effective competition in non-workplace pensions – addition to the list, targeted for H2/2020
  • CP on removing the minimum repayment amount from the manual repayment screen of credit card, store card and catalogue credit customers – amended from Q2 to TBC
  • Interim report for the market study on credit information – amended from Q2/2020 to 2021
  • Multi-firm review: sale and advice of equity release – amended from Q2 to H2/2020
  • Multi-firm review: wholesale broker remuneration – amended from Q2 to H2/2020
  • GI value measures pilot – amended from Q2 to H2/2020

Additions to the “Delayed implementation of rules” since the earlier 21 May update include:

  • Policy statement (PS) motor finance – targeted for H2/2020
  • PS on pension transfer advice including contingent charging – targeted for H2/2020
  • PS on prohibiting the sale to retail clients of investment products that reference cryptoassets – targeted for H2/2020
  • PS on introducing a Single Easy Access Rate for cash savings – targeted for 2021.

 

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