Regulator Covid-19 update 1 May

On 1 May, FCA:

• announced proposals for a Court declaration on business interruption claims
• proposed guidance for insurers on assessing whether products still offer value and appropriate action to take where they do not
• proposed guidance for insurers, brokers, premium finance firms and debt collectors on dealing with consumer policyholders in financial difficulties because of Covid-19
• updated on its work on mortgage prisoners, noting the changes in the mortgage market as a result of the Covid-19 situation – not least difficulties in establishing property prices, the advice to delay house moves and the removal of large numbers of products from the market. It also says lenders have granted 1.6m payment holidays. FCA says that in the circumstances it would be wrong to require lenders to tell customers about switching options at this time and is extending the window for them to do so by 3 months. It is also reminding firms to treat customers fairly when setting variable rates and
• clarified its position on how it expects firms to handle complaints during Covid-19. Among its expectations are that firms should pay out promptly where redress is due and resolve promptly and fairly complaints from vulnerable consumers and small businesses who may face serious difficulties resulting from lack of fair resolution of the complaint. FCA understands that some firms may find it hard to meet regulatory deadlines and invites them to contact it if this is so. It expects CMCs to give firms some leeway in responding to complaints before referring matters to FOS.

Treasury has made and order amending the Regulated Activities Order to remove from the scope of the consumer credit regulatory regime loans of £25,000 or less made by commercial lenders to sole traders, unincorporated associations and small partnerships under the Bounce Back Loan Scheme. These loans will be exempt credit agreements, and lenders will not require authorisation under FSMA in order to make the loans.  However, debt collecting in relation to these loans will remain a regulated activity. The instrument takes effect on 4 May, breaching the normal rule for it to be laid before Parliament 21 days before taking effect, as to allow the normal time frame would significantly hinder the proper operation of the BBLS which could negatively impact small businesses’ solvency and the UK economy. Treasury will also be changing ss 140A – C of the CCA as soon as possible, with retrospective effect.