What the regulators expect

A couple of weeks ago, we looked at critical issues in business continuity planning for financially regulated firms in the light of COVID-19. Since then, the UK regulators have issued a number of bulletins giving firms guidance or setting out their expectations. We've set out below what they've said generally and in specific market sectors – up to 25 March 2020. We update our FIN site continuously, so you can check there for day to day developments. 

Reasonable steps

Overall, the regulators expect firms to be taking reasonable steps to be prepared to meet the challenges COVID-19 poses to customers and staff and to provide strong customer support. Firms should also be managing their financial resilience, making use of capital and financial buffers as appropriate, and should be contacting their regulator if they feel they may be unable to meet their financial resources requirements or pay debts as they fall due.

Key workers

The PRA and FCA have published guidance for dual-regulated, FCA solo-regulated or PSR-regulated firms, and operators of market infrastructures, on how to identify key workers in the sector. The guidance says firms are best placed to decide which of their staff are essential, but says they should start by identifying the activities, services or operations that would be likely to lead to the disruption of essential services to the real economy or financial stability if interrupted. Firms should also identify critical outsource partners. While there is no absolute expectation that a single senior manager be responsible for the firm's response to COVID-19, the guidance suggests the SMF1 function holder (the Chief Executive) be accountable for ensuring an adequate process. The FCA also suggests that it may perhaps become part of the responsibilities of an SMF2 (finance) or SMF24 (operational resilience) to deal with the firm's response. In terms of key workers, the guidance suggests relevant roles may be individuals essential in:

  • the overall management of the firm;
  • the running of online services and processing;
  • the running of branches and provision of customer services;
  • payments processing and cash distribution;
  • corporate and retail lending and administration of debt repayment;
  • processing of claims and insurance renewals;
  • operation of trading venues and other critical elements of market infrastructure;
  • risk management, compliance, audit and similar functions; and
  • support to the above roles, like finance and IT staff.

The regulators say firms should consider issuing a letter to all individuals they consider to be key workers that the individuals can present to schools.

Other employment considerations

COVID-19 has been categorised by the World Health Organization (WHO) as a pandemic, and the risk to the UK public has been raised from low to moderate by the UK Chief Medical Officers. As such, firms need to bear in mind both employment law and their health and safety obligations.

As well as the key worker considerations, employment impacts stem from a variety of angles – staff and supply chain with who have the virus, school and nursery closures and customers ability to repay debt to name but a few. 

The Government is regularly issuing guidance and new information to help firms navigate this complex area. Firms should also familiarise themselves with the coronavirus job retention scheme (furlough scheme) which is intended to pay employees who would otherwise be redundant or subject to a requirement to remain away from work without pay and are instead designated as "furloughed".


The FCA has set out its position on how it expects insurers to act given the unprecedented impact of COVID-19. Above all, it expects firms to consider very carefully the needs of customers and to be flexible in how they treat them. The FCA makes it clear it does not expect to see policyholders’ ability to claim impacted by circumstances over which they have little control and urges firms to be clear on their communications of exclusions that may impact a policy, whether on new sales, renewals or mid-term changes.

Firms must also ensure they have in place plans that will manage and mitigate the operational impact of COVID-19, particularly in respect of systems and controls, a responsible Senior Manger, and methods that ensure customers’ best interests are met and that communications are clear, fair and not misleading. Firms should be looking at how to provide critical services in the absence of staff, and should notify the FCA if they identify gaps that could cause customer harm.

Key areas already identified by the FCA are:

  • travel insurance – where it expects firms clearly to communicate the impact on existing policies and renewals – and to take account of situations where a renewing policyholder was given a reasonable expectation that cover would continue. It expects that consumers should easily be able to see what the scope of cover is, and should have access to call centres;
  • motor and home insurance – the FCA is clear that it does not expect insurers to reject claims where consumers are temporarily working at home or using their vehicle in a different manner to usual. It also expects firms to provide cover in relation to vehicles that cannot currently obtain (and are exempt under the Government guidance from obtaining) an MOT certificate;
  • private medical insurance – insurers will need to be effective, timely and compassionate in communicating with customers whose privately insured treatment is non-urgent and may therefore need to be delayed;
  • health insurance – the FCA expects firms to make clear any time period restrictions when customers take out a new policy;
  • product suspension – the FCA understands firms may want to suspend some product offerings but says they must consider their customers’ needs carefully, in particular where customers are relying on renewals to continue cover, and should not sell customers alternative products that do not meet their demands and needs or are not in their best interest;
  • renewals – and the need to consider product design. If firms are now wishing to exclude coronavirus they must make it very clear and prominent. Firms must also be able to show they are treating customers fairly and complying with the FCA’s rules if they are making any change, and to make exclusions clear in all communications; and
  • mid-term adjustments – firms need to be very careful if they wish to do this, not least considering whether there is a written term in the contract that would enable them to make the change and whether the terms they want to rely on are fair and transparency under the CRA, as well as whether they have considered the TCF position.

Although most of its messages are aimed at insurers, the FCA calls on brokers to also keep abreast of developments so they can advise their customers properly. 


The FCA has given guidance to firms on mortgages and coronavirus: it confirms:

  • that firms must give customers who provide information suggesting they may have difficulty meeting home finance payments a three month payment holiday if they ask for one, and otherwise offer them a payment holiday. Firms must give customers proper information so they understand the implications of the payment holiday. The FCA stresses this does not mean shorter payment holidays or alternative options may not be suitable, but that the customer should not have to pay any charge or fee in connection with the grant of a payment holiday; and
  • that firms should not commence or continue repossessions and must ensure customers are kept informed of the consequences of any suspension.

Unsecured debt products

The FCA expects firms to show greater flexibility to customers in persistent credit card debt. The FCA rules require firms to take various steps in relation to customers paying low amounts over long periods, culminating in an offer of options for quicker repayment after 36 months of persistent debt – and the ultimate sanction of suspension of the card if the customer does not respond. The FCA now says firms should give any affected customer until 1 October to respond to communications and would not need to suspend any cards before that date.

Part of the initiative to ensure access to cash has been to raise cash machine withdrawal limits. The FCA also notes that as increasing numbers of consumers use online or phone banking, firms need to have resources to help – especially in respect of vulnerable customers. Fraud and personal data controls will also become increasingly important.

Broader customer issues

The FCA has welcomed the actions many firms have taken to support consumers, such as enabling access to cash by waiving fees. It is working with banks and building societies on keeping branches open, but is encouraging consumers to visit only where essential, and to use other methods of getting their money where possible.

Among all this, the FCA has noted that firms should still be dealing with complaints promptly and within the timescales set in its rules. However, it has asked firms to contact it to discuss any problems they feel they may have in meeting dealines and said firms must write to customers explaining why deadlines have been missed. 

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We are here to help any firm struggling with how to keep compliant with regulatory expectations in these trying circumstances.