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Law360, London (March 17, 2020, 4:11 PM GMT ) Britain's finance watchdog said Tuesday it will delay or postpone any plans that are not critical to protecting consumers and market integrity in the short term, in a bid to mitigate the financial impact of the rapidly spreading novel coronavirus.
The Financial Conduct Authority will reschedule most of its planned work and will extend deadlines on many of its open consultations until Oct 1. It has also pared back its routine activity, the watchdog said.
"This will allow firms to focus on supporting their customers during this difficult period," the FCA said.
A small number of regulatory changes will go forward, it added. These will be focused on protecting vulnerable consumers and protecting the integrity of longer-term programs.
UK Finance, a trade group representing banks and financial services companies, said the changes would be helpful to the sector.
"The FCA's steps to help minimize demand on the industry's existing capacity in the short term means that our focus can be pointed toward customer-care strategies," UK Finance CEO Stephen Jones said.
The watchdog also stressed that it has resources on hand to deal with the crisis as and when they are needed. It has set up dedicated teams to manage the outbreak and the situation is also being reviewed by the FCA's executive committee.
"The FCA stands ready to take any steps necessary to ensure customers are protected and markets continue to function well," the watchdog said.
It urged the financial services companies it regulates to also review their arrangements to address coronavirus risks, while also protecting employees, consumers and the market.
The watchdog also said it understands if some regulatory responsibilities, such as recording calls, may not always be possible in new remote working environments. It said companies should contact the regulator if they cannot meet these requirements.
Jake Green, a regulation partner at law firm Ashurst LLP, said this represents a "slight and sensible shift in approach."
"From calls having to be recorded, to an acceptance that sometimes this may not be possible — the inference being that the clients' best interest trumps recorded lines," Green said.
The regulator added that it expects companies to take "reasonable steps" to make sure they can withstand the crisis. It also expects the firms it regulates to actively manage and monitor their own liquidity as the outbreak spreads.
"Firms should report to us immediately if they believe they will be in difficulty," the watchdog said.
It pressed firms to provide strong support for consumers during the outbreak.
The regulator said firms should be thinking about ways to change their operations to support customers. Some companies have already found ways to give customers better access to cash. The regulator praised these initiatives but asked firms to inform it of their approaches so the watchdog can assess them.
The finance watchdog's move comes after a number of regulators announced emergency measures to mitigate the impact of the outbreak.
The European Banking Authority said Friday that it is delaying this year's biennial stress test for banks until 2021. The FCA on Friday temporarily banned the short selling of more than 150 Spanish and Italian stocks listed on the London Stock Exchange.
The European Central Bank on Thursday relaxed a number of capital requirements for EU banks.
--Additional reporting by Joanne Faulkner and Najiyya Budaly. Editing by Alyssa Miller.
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