Regulator Covid-19 Update 25 March

On 25 March:

• Treasury, BoE and FCA have written to the CEOs of UK banks on Covid-19 and bank lending.  The letter explains how the Covid Corporate Financing Facility will help firms of investment grade or equivalent, the Coronavirus Business Interruption Loan Scheme will provide government-backed finance of up to £5, fo SMEs and the new Term Funding Scheme with additional incentives for SMEs will help banks to continue to provide credit. It also reminds firms of the now 0% CCyB and its guidance to firms on making use of buffers, together with the regulatory decisions already announced to cancel or postpone initiatives. The regulators appreciate all banks have done so far, and say they must now all continue to ensure the benefits of the various measures get through to businesses and consumers, so that firms whose business models were viable before Covid-19 struck will remain viable once it is over. and
• EBA has called on regulators to be flexible and pragmatic in applying prudential standards and has issued clarifications to help with this, but reminds banks the must ensure they have in place adequate risk measurement processes. It says consumer protection must be a priority so banks should ensure full disclosure and make sure consumers do not suffer hidden charges or automatic impact on credit ratings. It also notes the importance of well-functioning payment services and says contactless limits should be set at the highest EU threshold. It will lift some reporting measures for PSPs. It has also decided to postpone all public hearings to a later date, extend all ongoing consultations by 2 months, and extend the remittance dates for funding plans data and the most recent QIS.