CCL Regulatory Update

In this edition we review regulatory events and initiatives for May 2020.

UK Edition - May 2020

1.0 FCA Updates & Developments

1.1 FCA COVID-19 Delayed Activities and Regulatory Change  

The FCA has updated its webpage regarding its work plan review to delay or postpone activities that are not critical, in order to protect consumers and market integrity. The delay or postponement in certain activities is intended to allow firms to focus on supporting their customers during the current situation.

The regulator has delayed multiple consultation papers and postponed calls for input, publications and rules in light of its plan to help firms focus on customers.

1.2 FCA Extends Period to Cover Absent Senior Managers  

The FCA has published a webpage to extend the maximum period firms can arrange cover for a senior manager without being approved. This period has been increased from 12 weeks to 36 weeks in a consecutive 12-month period.

This modification is available to all solo-regulated firms and aims to provide flexibility to firms during the pandemic crisis. The modification will also allow firms to allocate prescribed responsibility of the senior manager to the individual.

Firms can apply for the modification in advance of actually requiring the modification. This will take effect from the date the firm applies for it and end on 30 April 2021.

For advice and support with the any SM&CR matters, please contact us.

1.3 FCA Coronavirus Information for Firms – Information Security  

The FCA has updated its webpage providing information for firms during the coronavirus crisis. The update is regarding information security and the threat it poses during the pandemic.

Firms are expected to prioritise information security and ensure they have adequate controls to manage cyber threats and respond to major incidents. Firms should look to implement enhanced monitoring to protect information and have firm critical processes, including network and video conferencing software.

Firms are expected to proactively manage the increased risks during the crisis.

1.4 FCA Financial Services Regulatory Grid Launched  

The Financial Services Regulatory Initiative’s Forum has launched its financial services regulatory grid to help firms prepare for upcoming regulatory work.

The grid is intended to set out the key initiatives in the regulatory landscape and the relevant planned timetable of such activities.

For advice and support with the any SM&CR matters, please contact us.

1.5 FCA on Firms Handling Complaints During Pandemic  

The FCA has published a statement on how firms should handle complaints during the pandemic crisis. The statement clarifies the FCA’s position on complaints handling in the current situation. An extract of some of the topics from the statement are set out below:

  • Complaint handling capacity and priorities
  • Vulnerable consumers
  • Maintaining the quality of complaint handling
  • Firms experiencing difficulties
  • The Ombudsman Service’s general approach

Firms are expected to take all reasonable steps to ensure as many complaints are handled as possible, and that this is done fairly and effectively. Where the firm’s capacity to handle complaints is reduced, firms are expected to prioritise the following:

1. paying promptly complainants who have been offered redress and accepted that offer
2. prompt and fair resolution of complaints from:

  • consumers who are likely to be vulnerable to harm if their complaint is not resolved promptly and fairly
  • micro-enterprises and small businesses who are likely to face serious financial difficulties if their complaint is not resolved promptly and fairly

3. sending timely holding responses to those complainants in point 2 above where their complaints cannot be resolved promptly

Where a firm cannot deliver the above three priorities adequately and effectively at home, the FCA considers it will be appropriate for firms to maintain a minimal physical onsite presence. This is as long as the physical site is in compliance with Government guidelines.

The statement also includes the definition of vulnerable customers and the FCA’s expectation that there should be no reduction of complaint handling quality.

Any firms which are experiencing difficulty to comply with the requirements set under DISP 1.6 - the requirement to provide a final response to complaints within 8 weeks of receipt - should inform the FCA and detail the steps it has taken to manage and address its non-compliance.

The statement will be reviewed and updated in 3 months’ time.

CCL’s RegTech solution, CCL C.O.R.E includes a complaint handling tool that will facilitate the handling of complaints, even during lockdown. To find out more about CCL C.O.R.E, please request a demo.

1.6 FCA Statement on Handling Post and Paper Documentation

The FCA has released a statement on how firms should handle post and paper documentation during the COVID-19 crisis.

Firms are expected to continue to comply with the requirements of post and paper-based processes. Where firms may not be able to comply, they should notify the FCA as soon as possible.

Firms should try to ensure customers are not disadvantaged because of delays and make every effort to contact customers who do not use online services. While the FCA will show flexibility on approaching post and paper documentation issues, it still expects firms to send communications in a timely manner particularly to ensure protection to vulnerable customers who are more likely to not use online services.

Firms are expected to provide general updates on how it will treat incoming and outgoing posts and cheques through its website and other public channels. Customers should be invited to contact the firm if they wish.

The arrangements placed via the statement will be reviewed as the pandemic develops.

1.7 FCA Allows Individuals to Carry Over CPD from COVID-19  

The FCA has released a statement allowing individuals to carry over Continuous Professional Development (CPD) hours over to the next CPD year.

Firms are expected to demonstrate that relevant individuals remain competent to carry out their work and CPD is an essential part of demonstrating such competence from individuals. However, due to exceptional circumstances amidst the pandemic, the FCA has allowed firms to defer individuals’ CPD to the next CPD year.

This temporary deferment is allowed for individuals under exceptional circumstances to carry over any uncompleted CPD hours to the next CPD year. This applies to CPD years ending before 1 April 2021.

The statement sets out what the FCA considers as exceptional circumstances:

  • When individuals during the current pandemic:
    • are needed to carry out extra duties to manage risks, and/or to provide support, to consumers and businesses during the current situation
    • have caring responsibilities, such as having to care for a partner, child, parent, grandparent or sibling
    • have difficulties accessing CPD material, for example, due to technical difficulties or unavailable material
  • Where it is not realistic to expect the individual also to fulfil the CPD requirements.

For more details, please visit the FCA website.

Firms will also need to take into account the following when considering deferral:

  • the individual’s role and responsibilities
  • the individual’s knowledge and skill development, (including any relevant Covid-19- related training) during the current CPD year and their continued competence 
  • the number of CPD hours they intend to carry over
  • the individual’s circumstances during the current situation
  • the reasons why the individual is unable to complete the relevant CPD

Firms will not be required to report to the FCA if it decides to defer CPD hours but will need to record its decision and reasoning as well as the CPD hours deferred.

2.0 PRA Updates & Developments

2.1 PRA and Bank of England Statement on COVID-19

The Bank of England and the PRA have published a statement on COVID-19 announcing changes to resolution measures aimed at alleviating operational burdens on PRA firms in light of the pandemic.

The submission deadline for disclosing a summary report of UK banks and building societies’ preparation for resolution has been extended by a year. The first reports will now be due to the PRA by October 2021 and make public disclosures by June 2022.

3.0 EU Regulatory Updates

3.1 ESMA Issues Public Statement on COB Obligations from Increasing Retail Activity  

The European Securities and Markets Authority (ESMA) has released a public statement reminding firms of their obligations under conduct of business from an increase in retail market activity during this pandemic crisis. The statement is intended for both firms and their clients to bring to attention the risks in the market.

ESMA reminds firms of the following:

  • The obligation to act honestly, fairly and professionally in the best interest of the client
  • To maintain an adequate product governance arrangement
  • Assessment of target market in an appropriate and proportionate manner
  • Provide appropriate information in good time
  • Fulfilment of suitability and appropriateness requirements


4.0 Financial Crime

4.1 FATF COVID-19 Related Money Laundering and Terrorist Financing Risks

The Financial Action Task Force (FATF) has published a paper to identify challenges, good practices and policy responses to new money laundering and terrorist financing threats and vulnerability arising from the COVID-19 pandemic.


4.2 FCA Expectations on Financial Crime Systems and Controls 

The FCA has released an article on its expectations on how firms should apply their systems and controls to combat and prevent financial crime during the pandemic.

The regulator recognises current operations to anti-money laundering rules may need to be re-prioritised or reasonably delayed, as may certain activities such as ongoing customer due diligence or reviews of transaction monitoring. These delays are reasonable if:

  • The firm does so on a risk basis
  • There is a clear plan for the firm to return to the norm as soon as practicable

The article also includes flexibility within client identification and references the Joint Money Laundering Steering Group’s guidance on carrying out remote client identity verification. The list of documents accepted are provided within the article.

For advice and support with the any financial crime matters, please contact us.