Fri, Apr 3, 2020
The Financial Conduct Authority's (FCA) interim CEO, Christopher Woolard, has written to CEOs of firms that provide services to retail customers in the context of the COVID 19 pandemic. The FCA recognizes that this is a challenging time for all firms but notes the continuing need to protect retail consumers.
The FCA notes that client identity verification needs to continue for anti-money laundering purposes, but firms have flexibility within the Money Laundering Regulations on how to verify a customer’s identity. Steps can be taken to verify client identity remotely and the FCA gives guidance on additional checks and safeguards which firms can use to assist with verification.
The FCA has been working with the ESMA who has issued further information on best execution. The FCA expect firms to continue to meet their best execution obligations, including their obligations on client order handling. However, the FCA has no intention of taking enforcement action where a firm:
Firms providing portfolio management services, or holding retail client accounts that include leveraged investments, are currently required to inform investors where the value of their portfolio or leveraged position falls by 10% or more compared with its value in their last periodic statement, and for each subsequent 10% fall in value. The FCA has no intention of taking enforcement action where a firm:
The FCA will adopt this approach for six months (to 1 October 2020).
The FCA also took the opportunity to remind firms of their obligation to maintain adequate financial resources, capital and liquidity. This applies to all firms, not just those subject to specific prudential provisions, such as BIPRU or CRDIV and ICAAP, and those which have been set buffer requirements. This means that appropriate resources should be held in order to ensure firms are able to weather precisely these events.
Read the letter here.
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