The post Due Diligence Demands: Banks Under Increased Compliance Pressure first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>A recent Complyport article mentioned the National Audit Office (NAO)’s estimate that Bounce Back Loans (BBLs) worth £4.9 billion were fraudulent. This was the alleged result of outdated and ineffective legal requirements as well as the failure of the government to implement adequate fraud prevention measures in a timely manner—namely at the point that these loans were granted.
Moreover, it appears that the criminal actors were able to sharpen the tools at their disposal to commit fraud more efficiently and effectively than the lending organisations and government. Amidst the pandemic, it seems that these fraudsters identified the vulnerabilities and weaknesses of the loan scheme and exploited them in a speedier fashion than the regulated and government markets. Is there a lesson in efficiency here?
To date, £63 million has been paid out to banks that have suffered losses from fraudulent loans during the BBL scheme. However, the money given out could be wrested back. According to Patrick Magee, Chief Commercial Officer of The British Business Bank, the sums could be retrieved if the banks are found to have applied sub-par checks, including instances where they relied on self-certification by borrowers. This may translate in the loss of a substantial governmental crutch for these banks: lenders found not to have applied the appropriate due diligence checks on their borrowers will have to bear the burden of those loans granted to fraudsters.
It is worth noting that £240 million in claims by banks or lenders regarding losses incurred as a result of fraudulent Covid loans have already been dropped. This can also be viewed as £240 million worth of errors and inadequate regulation being admitted and recognised by banking institutions and lenders. The number is expected to rise as a further £5.7 billion is estimated to have been lost from fraud and error within the furlough and self-employment programmes.
The Treasury has announced plans for the creation of a Public Sector Fraud Authority (PSFA) to supplement and reinforce the Taxpayer Protection Taskforce launched in March 2021. Staffed by “an elite fraud squad” of data experts and economic crime investigators tasked with recovering public funds, the PSFA will attempt to settle discontent and answer government critics. One of the critics, Shadow Chancellor Rachel Reeves, emphasised that ignoring warnings regarding the lack of anti-fraud measures in government support schemes resulted in £11.8 billion of taxpayer money handed over to fraudsters and criminals.
The proposed plan will cost £25 million, in addition to the £100 million that the 2021 taskforce cost, and will aim to crack down on criminal fraudsters who have taken taxpayer money. The authority will also be in charge of monitoring suspicious activity and entities trying to gain access to government contracts, and will review existing programmes to try to detect any vulnerabilities to fraud.
The PSFA and the way it is presented as the grand solution to the problem of fraudulent Covid loans, should be taken with a grain of salt. There is definitely a need to recover money taken by fraudsters and criminal actors, but it must be recognised that this is a reactive position; the proverbial horse has already bolted. There needs to be a concentrated effort to act and implement appropriate counter-fraud measures to prevent this type of orchestrated criminal activity occurring again—not just at this grand scale but at any level where a criminal actor will seek to take advantage of the vulnerable or innocent to make a personal gain for themselves.
Several questions emerge the more we examine details surrounding the PFSA. Firstly, the PFSA’s budget of £25 million can be equated to only 5% of the National Crime Agency (NCA)’s. If the NCA, with the much greater budget (and admittedly much wider scope of control and activity), has been unable to effectively manage and mitigate the risks associated with fraudulent loans, it begs the question of how effective the PFSA can be—or how effective we can reasonably expect them to be. Secondly, should the PSFA be effective in recovering public funds, prosecutors like the Serious Fraud Office have not received any additional funding to help recover funds under their investigation. This means that the backlog of approximately 50,000 Crown Court cases will remain a great obstacle for “the system” to process and overcome. Finally, the initial responsibility of distributing Covid loans sat with the Treasury itself. As the PSFA will report to the Chancellor, is it therefore likely that the PFSA will look, or at least look closely and publicly report, as to the actual root cause of the fraudulent losses?
Recovering the money that has been lost will rely on cooperation between national and international authorities to investigate fraudsters based locally and abroad. Moreover, discussions on increasing the resources available for the relevant authorities would greatly benefit counter-fraud efforts.
We must also remember that the overall costs to the public purse are ever-increasing: it covered the administration of the loan in the first place, then the losses to fraud, and will now cover the cost of recovering those losses. Regulating the distribution of loans effectively and appropriately in the first place would have potentially prevented either the majority of the fraudulent loans now sought to be recovered, or a further loss from occurring. If ever there was a case to prove that an investment early on in effective and proportionate controls being the key to incurring costs in remedial and reparative actions later on – this seems to be it.
Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:
If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.
Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.
Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.
We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.
Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.
Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.
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]]>The post Brexit Risks In Financial Services first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>Many financial services firms face risks relating to Brexit that could prove costly and damaging. The larger banks, insurance companies and financial institutions have assessed Brexit risks and acted upon them where able to do so. However, this accounts for a small fraction of UK regulated firms. Many financial services firms have not properly assessed Brexit related risks. Even where firms have done so, they have often not properly documented their findings and conclusions.
The current Transitional Period ends on 31 December 2020, which is only 10 weeks away. At the time of writing, there is no trade agreement with the EU that will replace the previous Single Financial Services Market passports for the delivery of retail banking services, investment services, insurance services, investment fund management services, payment services and mortgage services.
Wholesale market infrastructure (wholesale banking, settlement, clearing and reporting of transactions) poses a risk of significant disruption and harm. It is clear there will be equivalence agreements in place by 31 December, to avoid market disruption. However, to date the signs are these will be temporary and will be agreed on a sector by sector basis.
Research shows that around 50% of UK financial services is conducted within the UK with UK residents, whilst around 25% is conducted with overseas clients outside of the EU/EEA. This means that around 25% of UK business is done with EU/EEA clients. The FCA regulates around 60,000 firms of which less than 2,000 are classed as large banks, insurance companies or financial institutions. This implies that there are several thousand smaller and medium-sized UK firms who do business with EU/EEA clients.
However, Brexit risks are not confined to carrying out services for clients in the EU/EEA. What is often overlooked is the cross-border nature of the service supply chain that has arisen from the UK having been within the EU for 47 years. Many firms will find that they depend on services where there is at least an element of cross-border dependency. This is most common in services such as IT, banking, insurance, legal agreements. Two of the most obvious and important areas affected are whether employees who are EU/EEA nationals have the right to remain and work in the UK and data storage and sharing.
The problems arise in smaller and medium sized firms who have not carried out any proper risk assessment of the impact on their business of Brexit with or without a trade deal. Many may be unaware of issues that are likely to cause severe problems if those Brexit risks crystallise and cause harm to clients or significant disruption to a firm and its profits or capital base.
Such incidents must be reported to FCA. This is likely to cause concern to the FCA as it has persistently warned firms to ensure they have carried out risk assessment and planning to prepare for Brexit alongside other risks ranging from capital and liquidity adequacy, conduct of business issues and major events such as the COVID -19 Pandemic.
Against the background of the implementation of the Senior Managers and Certification Regime (SMCR) with its focus on senior managers being aware of major risks and having controls in place to mitigate them, firms can expect little or no sympathy from the FCA if things go wrong. At best, a firm will find it’s reputation damaged and, at worst, it could face fines and severe sanctions imposed on its senior managers.
Many smaller and medium sized firm may not have the knowledge and skills to carry out the required risk assessment. Even where they have, they may lack the experience and know-how to deal with the outcome. Such firms must bite the bullet and seek help from external experts. Hiring good advisers to identify and mitigate the problem is likely to be much more cost-effective than ignoring it and facing client dissatisfaction, reputational damage and regulatory fines and sanctions.
Paul brings with him over thirty-five years of financial services experience including over thirty years in financial services regulatory and compliance consultancy in wholesale and retail markets. He currently chairs the APCC’s EU Withdrawal (Brexit) Working Group and is regularly in the press and on Brexit discussion panels.
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]]>The post Press Release – Automotive finance firms urged to comply with FCA requirements despite COVID-19 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>Changes include the FCA accepting digital signatures on loan agreements; more online meetings with clients, which will require verification methods of income, address and affordability of loans and agreements to have inbuilt rigour and to be compliant with current legislation.
Complyport has warned that electronic and digital processes must still fulfil existing legal requirements. The FCA recently confirmed it would accept electronic signatures for fund-related applications and on all applications from mutual societies.
The FCA has stated that appropriate steps need to be taken onboard to minimise the risks involved with using electronic signatures, especially those which may impact a firm’s responsibility to treat customers fairly with due care.
The FCA said: “Firms should consider the client’s best interests rule and the fair, clear and not misleading rule to ensure that, when a client signs a document electronically, this does not make it more difficult for the client to understand what they are agreeing to.”
Paul Grainger CEO of Complyport Ltd commented:
“The COVID-19 crisis has meant that we have lost the ability to have physical 1-1 meetings to check applications and explain the implications of legal agreements entered into by customers. However, automotive finance lenders and motor dealership staff dealing with loan finance must still ensure that in the new “norm” of digital meetings and electronic transactions, the finance process is compliant with FCA requirements. Firm’s must fully consider the legal position around the use of electronic signatures and, indeed, around other associated areas such as explicit consent needed in the processing of certain data.”
“So we would expect firms to review their processes and procedures. We expect firms to take a pragmatic approach to adapting process and procedures to facilitate the provision of suitable advice and transactions for their customers, whilst ensuring they remain compliant with FCA requirements..”
Paul Grainger CEO Complyport Ltd further noted:
“Complpyort has warned firms that where firms do move from wet-ink to electronic signatures, they should monitor data including conversion rates, cancellations and complaints.”
The FCA has also provided guidelines in a 3-months payment freeze to customers that are facing financial difficulties in meeting their finance or leasing payments due to coronavirus and suggests firms not to end any agreements or repossess vehicles.
Firms may fairly adjust the terms of a contract affected by coronavirus if needed. Firms should not use temporary depreciation of car prices to recalculate Personal Contract Purchase (PCP) balloon payments at the end of the term. They should offer to the affected customer appropriate solutions in case they wish to keep their vehicle at the end of their PCP agreement but cannot cover the balloon payment due to financial difficulties caused by the coronavirus.
ENDS
For media enquiries:
John Kaponi – IPM Media Consulting Ltd:
07875 542 969
Notes to Editors:
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]]>The post How Financial Services Firms Should Handle Complaints During Covid-19 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>Firms should not take the current situation as an opportunity to delay unnecessarily or to not deal at all with complaints and they should take all reasonable steps to ensure that complaints can be dealt with by staff members working from home, where this can be done fairly and adequately.
Where firms have a reduced capacity to handle complaints, the FCA expects firms to prioritise:
Where a firm is not able to deliver these three priorities adequately and effectively through working from home, the FCA advises firms to maintain the physical presence onsite needed to carry out the necessary complaint handling processes. Social distancing onsite, therefore, should apply for as long as the government guidelines insist.
It is important to note that the coronavirus outbreak is likely to intensify personal circumstances that can cause vulnerability and, indeed, can cause some individuals who might not ordinarily be deemed to be vulnerable to become vulnerable. Such cases include the:
This should not just apply to individuals, as it is possible that small businesses can also face circumstances that can make them vulnerable to harm especially if a firm fails to handle complaints promptly and fairly.
Whilst it may take longer to review complaints when working remotely, the FCA does not expect any reduction in the quality of firms’ complaint handling procedures. Firms should continue to meet the relevant obligations, including investigating complaints competently, diligently and impartially, and paying appropriate compensation or making other necessary remediation.
The current circumstances should not prevent firms from:
As complaint handling may take longer than normal, it is acknowledged that some firms might be unable to meet the timescale requirement set in DISP 1.6. Particularly, the requirement to provide a final response to complainants (generally within 8 weeks of receipt, less for some business types), or to provide a timely explanation why they are unable to provide a final response.
Firms facing difficulties to meet those requirements are encouraged to inform their usual supervisory contact or contact firm.queries@fca.org.uk, conveying the steps they are taking to manage and address the non-compliance.
It is important to note that, whilst the FCA acknowledges that some firms may struggle at this time in meeting their regulatory obligations, these firms are likely to be those that receive large volumes of complaints. Complyport would expect that, in the majority of cases, firms that only deal with a small number of complaints are unlikely to be materially affected by the Covid-19 disruption and, therefore, should be expected to handle complaints in the normal way.
Based on the current operational challenges that firms face, the FCA expects CMCs to allow firms a reasonable amount of extra time, beyond 8 weeks, to give a final response before referring complaints to the FOS . unless there is any particular urgency in the individual complaint or the situation of the complainant.
Similarly, the FOS is expected to take current circumstances into consideration and may return a complaint to the CMC and ask the firm to communicate with the CMC directly to discuss and resolve the complaint. Professional cooperation between CMCs and the FOS will also ensure that the latter can focus on resolving complaints referred by vulnerable customers.
Additionally, CMCs are required to take these circumstances into consideration when dealing with their clients. In particular, CMCs should keep clients updated on their complaints and relevant developments as per CMCOB 6.1.9 and they should consider the client’s specific circumstances when collecting fees.
The FCA is also encouraging CMCs to take account of the current circumstances when submitting Data Subject Access Requests as firms may have difficulties in responding within the defined timeframes. Therefore, CMCs should communicate with firms to understand those problems, consider guidance from the Information Commissioner’s Office (ICO) and, where issues cannot be resolved with firms, speak to the ICO directly before making complaints to it about those firms.
The FCA expects the FOS to take is guidance in the current environment into account when considering a firm’s compliance with the complaint handling rules.
The considerations outlined by the FCA apply to all complaint including those relating to PPI. The FCA reminds CMCs of the Dear CEO letter on PPI complaints. The letter still reflects the FCA’s and the Ombudsman Service views.
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How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:
Jan Hagen – jan.hagen@complyport.co.uk
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]]>The post Coronavirus (COVID-19) Update: The FCA Proposed Supportive Measures For Motor Finance And High-Cost Credit Customers first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The FCA advises firms to allow a 3-months payment freeze to customers that are facing financial difficulties in meeting their finance or leasing payments due to coronavirus and suggests firms not to end any agreements or repossess vehicles.
Furthermore, the FCA proposes that firms should:
The FCA proposes that high-cost short-term credit firms should provide a 1-month interest-free payment freeze to customers that are adversely affected by the coronavirus. This shorter period reflects both the short length of most loans and prevents firms from acquiring additional interest during the freeze period. At the end of the freeze period firms are encouraged to allow customers to pay the deferred payment affordably, either as one single payment or multiple smaller instalments.
High-cost short-term credit firms should also consider whether formal forbearance may be more suitable in the case where a customer has been suffering from financial problems before the coronavirus.
Firms that enter into rent-to-own (“RTO”), buy-now-pay-later (“BNPL”) or pawnbroking agreements should provide a 3-month payment freeze to customers facing payment difficulties due to coronavirus.
The FCA suggests that:
The FCA advises that in most other loan freeze arrangements, firms will be able to charge interest rates during the payment freeze period but, for those customers who require full forbearance, their interest rates should be waived. The current forbearance arrangements, such as suspending, reducing, waiving or cancelling any further interest or charges, deferring payment of arrears or accepting token payments, will still be applicable for customers with pre-existing financial problems.
The measures proposed by the FCA do not limit firms from providing more favourable terms to their customers if needed.
How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:
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]]>The post Coronavirus (COVID-19) Update: FCA Confirms Temporary Measures For Financial Relief For Customers Impacted By The Coronavirus first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>On behalf of the FCA, Christopher Woolard stated, inter alia: that many people are suffering financial distress as a result of the pandemic and these measures could provide some short-term financial support. These measures are targeted to consumers with credit cards, loans and overdrafts that are negatively affected by the pandemic. Nevertheless, customers who still have the capacity to make payments are advised to continue to do so. Additional supportive measures for other credit markets, e.g. the motor finance sector, will follow.
The measures require firms to:
The rule changes will be in force from 9 April 2020 and the total full range of measures will apply by 14 April 2020. The time in-between will allow firms to ensure they have the appropriate level of resources needed to handle their customers’ requests. Some firms, including banking institutions[1] and building societies, will be adopting these changes as of today (9 April 2020).
The FCA suggests that consumers should firstly check the firms’ websites and social media platforms as well as their online services to request assistance prior to contacting the firms by telephone in order to avoid increasing pressure on call centres.
The FCA confirmed that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by Community Development Finance Institution and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.
How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:
[1] The banks and building societies who are implementing the changes from today are – HSBC, Lloyds, RBS, Barclays, Santander and Nationwide.
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]]>The post Coronavirus (COVID-19) Update: FCA Announces Temporary Relief For The Publishing Of Annual And Half-Year Reports And Accounts first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>Under the temporary relief issued by FCA, Authorised Fund Managers (‘AFMs’) of UK UCITS schemes and non-UCITS retail schemes (‘NURS’) who need extra time in preparing their annual reports, will be given an additional 2 months’ period to publish them.
The temporary relief will also allow one extra month for the publishing of half-year reports. The extra time granted will allow fund managers to act on the best interest of their investors and produce accurate reports.
In both cases, firms need to inform the FCA if they intend to use additional time. In addition to this, and if applicable, firms must also communicate any material concerns under Principle 11. The FCA will maintain supervision of the authorised fund sector through data reports and discussions with investment managers.
Under UCITS Directive, authorised funds and open-ended funds operating as NURS must publish their audited annual accounts and reports within 4 months of their yearly accounting reference date (COLL 4.5.14R). Additionally, AFMs should include in the fund’s annual report a statement setting out their assessment of value, unless the AFM provides the statement in a different report (COLL 4.5.7R).
Nevertheless, firms that are able to publish their reports and accounts within the set timeframe without compromising either the quality of the reports or the existing health guidelines should publish their reports without making use of the additional time.
The FCA will not begin an enforcement action if AFMs publish annual reports and assessment of value reports within 6 months of their year-end accounting date.
Similarly, no enforcement action will be taken if AFMs publish half-year reports within 3 months of the end of their half-yearly accounting period.
This temporary relief is granted under the provisions of the rules in GEN 1.3 (Emergency), which permits appropriate relief to firms that may be unable to comply with a particular rule in the Handbook. GEN 1.3 sets out the various conditions that a temporary relief can be granted.
AFMs who wish to make use of the additional time should inform the fund’s depositary and auditors and email FCA with the details of the funds that this extension of time will apply and the intended date of publication at ukcis@fca.org.uk
AFMs should, before the original publishing date for either an annual report or half-year report, publish a statement on their websites explaining the rationale behind their decision as well as the intended publication date. AFMs should take all reasonable steps to inform the unitholders about the change in the publication date.
It should be noted that any firm which decides to make use of the additional time granted by this temporary relief would technically be breaching the rules by failing to publish the reports within the usual 2 or 4 month time-frame.
Regardless of the temporary relief, firms would still need to make a record of the breach on their relevant breach registers.
However, these breaches would not be subject to enforcement action by the FCA in the event that firms take the relevant steps as to notify the FCA, mentioned above.
The change in this policy is temporary, taking into consideration the Covid-19 pandemic and its consequences. The FCA will continue to review the policy and will publish further information as to how and when it will cease to apply in a fair, orderly, and transparent way.
How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:
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]]>The post Coronavirus (COVID-19) Update: FCA Statement – SM&CR And COVID-19 – Expectations On FCA Solo-Regulated Firms first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The FCA recognises that firms may need to make temporary arrangements to cover absences or change Senior Manager responsibilities in direct response to the pandemic. The FCA does not intend to enforce the requirement on firms to submit updated Statements of Responsibilities in certain circumstances. The FCA will not expect firms to notify it of these temporary arrangements under Form D but will expect allocations (however temporary) to be clearly documented by each firm internally.
A Modification by Consent to the 12-week rule to support firms using temporary arrangements during the crisis will be issued. If the arrangements last longer than 12-weeks firms can notify the FCA that they consent to a modification of the 12-week rule. Temporary arrangements can be extended up to 36 weeks. Notification need to be emailed to centralwaiversteam@fca.org.uk or made in writing to Central Waivers Team, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN
The FCA recognises there may be cases where firms decide to furlough Senior Managers if they are unable to fulfil their responsibilities, for example due to illness. Unless a furloughed Senior Manager is permanently leaving their post, the manager will retain their approval during their absence and will not need to be re-approved by the FCA when they return.
Firms should reallocate the Prescribed Responsibilities of a furloughed Senior Manager to another Senior Manager. However, if the firm appoints a temporary replacement under the 12-week rule, the proposed Modification by Consent allows a firm to reallocate the Prescribed Responsibilities to the replacement, even if they are not a Senior Manager and, of course, updated Statements of Responsibility need not be submitted to the FCA (see above). Individuals performing Required Functions – e.g. Compliance Oversight, should only be furloughed as a last resort.
How we can help: Should you need any guidance or assistance in dealing with issues related to Coronavirus (COVID-19) or matters relating to compliance with FCA or related regulatory matters, please contact:
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]]>The post Coronavirus (COVID-19) Bulletin – PRA: No Bank Dividends, Buy-Backs Or Bonuses In 2020 first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The PRA consultation with the seven largest UK banks (HSBC, Nationwide, Santander, Standard Chartered Bank, Barclays, RBS/Nat West and Lloyds) was very short. They were given a very short window in which to agree the PRA proposals and publish their intentions. The PRA action follows similar measures in other European countries.
The PRA justified its action in terms of banks conserving funds so that they are better placed to serve the economy during 2020. The banks will suspend dividends and buybacks on ordinary shares until the end of 2020 and cancel payments of any outstanding 2019 dividends. Banks will also conserve cash by not paying cash bonuses to senior staff. Bank boards were told to make sure they are considering the appropriateness of any accrual, payment and vesting of variable remuneration this year.
The PRA reiterated its confidence that based on the recent stress tests and actions agreed, UK banks will weather the crisis created by the Coronavirus Pandemic.
The PRA has also written to the CEOs of UK insurers. The PRA reminded insurance companies that when their boards are considering any distributions to shareholders or making decisions on variable remuneration, the PRA expects them to pay close attention to the need to protect policyholders, maintain safety and soundness and also ensure that their firm can play its full part in supporting the real economy throughout the disruption arising from the Coronavirus Pandemic.
Complyport expects the PRA (and the FCA) to extend scrutiny of board decisions regarding dividends, share buy-backs and payment of bonuses to smaller banks, insurance companies and financial institutions. The emphasis is expected to be placed on conservation of funds so that firms are better placed to ride out the economic and financial disruption arising from the Coronavirus Pandemic
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]]>The post Coronavirus (COVID-19): Update FCA Urgent Consultation: Temporary Financial Relief For Borrowers first appeared on Complyport - Your Trusted Partner in Governance, Risk, Compliance & Technology .
]]>The consultation is targeted at banks, building societies, credit card and store card issuers and other providers of consumer credit loans. The proposed measures are intended as an emergency measure.
They will provide urgent but temporary support to users of certain consumer credit products who are facing a financial impact because of the exceptional circumstances arising from Coronavirus.
The FCA is conducting an extremely brief consultation on the proposed measures.
The consultation begins today (2 April 2020) with a deadline of 9am Monday 6 April 2020. If confirmed the measures would start to come into force by 9 April 2020.
It is intended the measures would be in force for up to 3 months.
The proposals focus on ensuring consumers have access to cash or credit at a time when many may be financially stretched but do not have to pay severe charges or interest penalties as a consequence. The proposals are summarised below.
This package is intended to complement measures already announced by the government to support mortgage holders and tenants in the rental sector and the assistance being provided for furloughed employees and the self-employed. The FCA has already issued separate guidance to banks, mortgage lenders and insurers regarding dealing with consumers during the Coronavirus Pandemic.
In setting out its proposals and the extremely short consultation period, the FCA has cited the need to act to protect consumers at a time of national emergency.
Lenders do not have to put these measures in place until they come into force.
It may take a short period of time for lenders to put in place arrangements to provide these measures. Consumers should not contact their lender yet unless their lender is already offering voluntary assistance. The FCA expects to make a further announcement about these measures next week.
These proposals from the FCA would not prevent firms from offering more generous assistance to their customers. Some banks and lenders are already offering more favourable assistance to consumers than that proposed by the FCA.
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