By Amy Leisinger, J.D.
In response to the COVID-19 pandemic, the Financial Conduct Authority has been working with others nationally and internationally to maintain orderly markets and to help firms continue to operate while protecting consumers, according to FCA Executive Director of International Nausicaa Delfas. It will be crucial “to get the post crisis recovery right,” the official stressed. Delfas also discussed preparations for the end of the Brexit transition period and noted that firms should consider what they need to do to be prepared and what this may mean for customers.
Coronavirus response. According to Delfas, the FCA will focus on ensuring fair treatment for consumers and small firms and recognizing the challenges that both are facing in this unprecedented time. It is also important to protect the most vulnerable and help consumers avoid potential scams, she said. The FCA also will continue supporting users of credit products in financial difficulty due to COVID-19 and issuing guidance on loan schemes. To keep markets open and orderly, the authority has worked to ease burdens on firms by providing flexibility related to certain regulatory requirements and modified rules to facilitate capital raising, according to Delfas. The FCA also has enhanced market monitoring and firm outreach, and, if misconduct is suspected, the FCA will investigate and take action, she stated.
The FCA has been engaging with counterparts to coordinate views on relief measures, particularly regarding the potential implications of COVID-19 for LIBOR transition, Delfas explained. The overall focus of the international response has involved offering flexibility where appropriate and reprioritizing non-essential supervisory work. Markets and market participants will face growing funding and lending challenges in connection with the health crisis over time, and the FCA and the UK will need to remain vigilant in identifying and addressing any increased vulnerability, the official explained.
“[C]ooperation and close coordination with regulators, global standard-setting bodies and EU bodies will help us get to the right answers over time,” Delfas stated.
Brexit. Regarding Brexit, Delfas noted that negotiations for a future EU-UK partnership are ongoing and that the transition period is set to expire on December 31, 2020. The FCA, in conjunction with the Treasury and the Bank of England, continue to prepare for a range of transition scenarios, including using temporary permissions regimes for “passporting” firms and considering the “onshoring” of EU rules into UK statutes and regulations, she said. However, according to the official, some Brexit related risks will require multilateral or reciprocal action, including overlapping regulatory issues and broader contract continuity problems. Firms must consider what actions will be necessary to protect customers at the end of the transition period, Delfas stressed.
“Brexit reminds us that there is a set of issues beyond coronavirus. We all—the FCA and firms—need to continue to take steps to ensure a smooth exit out of the transition period,” she concluded.