Regulator Covid-19 update 22 May

After a relatively quiet week, on 22 May:

  • FCA announced further support for customers struggling to pay mortgages due to Covid-19. It is consulting on what options firms will need to provide to customers reaching the end of a payment holiday, while extending the time customers have to apply for one until 31 October. Comments on the emergency consultation are due by 5pm on 26 May;
  • FCA is consulting on additional guidance for payments firms to ensure they adequately protect customers’ funds. It has brought this aspect of its work forward because of the pressures Covid-19 is placing on firms’ finances. The guidance deals  with FCA’s expectations in respect of safeguarding measures and wind-down plans. It asks for comments by 5 June;
  • PRA has provided further information on regulatory capital and IFRS 9 requirements for payment holidays. The guidance follows FCA proposals and so focuses on mortgage products. PRA has developed the guidance specifically in the context of Covid-19 and will review it in light of future developments. It believes it is consistent with the CRR and IFRS but notes it is for firms to ensure their own compliance. Broadly, the guidance says that eligibility for, and use of, Covid-19 related payment deferrals or extensions to deferrals would not automatically result in a loan being regarded as having suffered a significant increase in credit risk or being credit-impaired, nor trigger a default under CRR. PRA will finalise its guidance when FCA finalises its measures; and
  • the Business Banking Resolution Service is concerned that the big update of Government-backed Covid-19 loan schemes raises significant questions about small businesses’ concerns over how banks treat them as their customers. Almost one third of respondent customers said they had experienced behaviour from their bank this year that would cause them to complain. 55% of respondents had accessed Government schemes and just under half of those said they did not expect to repay the loans. 82% of respondents thought lenders accredited for the government loan schemes should participate in the BBRS.

Emma Radmore