On 27 April:
- FCA has clarified the relationship between its rules and the UK’s CBILS and Bounce Back Loan schemes. It notes that, pending the roll-out of the BBL scheme, which, from 4 May, will give small businesses access to interest free loans for the first 12 months for amounts between £2,000 – £50,000, firms that comply with the newly amended requirements of the CBILS do not need to complay with CONC 5.2A.4-34 where the lending is regulated; although of course they must comply with the provisions of CONC 5.2A on creditworthiness assessments on all other regulated lending. It also noted that individuals who comply with the relevant CBILS requirements will be considered as complying with relevant obligations under COCON 2.1 and 2.2. Separately, it is allowing firms not to carry out further CDD on customers who have been CDD’d before applying under the schemes, unless any red flags or alerts are present. Firms must apply appropriate CDD to new customers, although in some circumstances SDD may suffice;
- PRA has clarified the regulatory treatment of the CBILS and the CLBILS. It notes it will be challenging for many business to provide forecast financial information with much confidence, and says it expects lenders to use their judgement on what information they need, and reminds them on what they should consider when making lending decisions. The guidance also notes that the terms of the guarantees the government provides under the schemes does not mean they could not be recognised as unfunded credit risk protection;
- FCA has written a Dear CEO letter about the need to treat fairly corporate customers who are preparing to raised equity finance. It has heard of some banks that may have used their lending relationship to get roles on equity mandates which their issuer customers may not otherwise have appointed them on – and worse, that this is often for a fee but with no real additional services being provided. FCA reminds firms of the many Principles and Rules that this practice would breach. It will be contacting firms who have had both a lending and equity manager relationship with a customer to enquire how it ensured it treated its customers fairly and handled inside information appropriately; and
- FATF has decided to postpone all remaining mutual evaluations and follow up deadlines, and pause the review process for the list of high-risk jurisdictions. It is also granting an extension to those in increased monitoring, but will report on Iceland and Mongolia as planned in June, as those jurisdictions have asked to proceed as planned.