On 6 May:
- FCA published a modification by consent and a direction to enable all solo-regulated firms to arrange for an unapproved senior manager to cover SMFs in an emergency, from the normal 12 weeks to 36 weeks, as previously announced. It also says firms can apply for the modification as a precautionary measure, in advance of actually needing it. The modification will take effect from the date a firm applies until 30 April 2021. It has updated its webpage on its expectations of firms under the SMCR accordingly;
- FCA set out its expectations on how firms should apply their systems and controls to combat financial crime during the crisis. Part of the critical controls includes timely making of SARs. FCA stresses that firms should not seek to address operational issues by changing their risk appetite, but accepts firms may have to reprioritise some actions. It says delays would be reasonable so long as they are done on a risk basis and there is a clear plan for return to BAU. FCA recognises firms may need to amend the way in which they verify customers’ identity and consider alternative methods to normal. It also notes its previous advice on alternatives to face-to-face verification and reminds firms that they should furlough their SMF 17 only as a last resort;
- Nausicaa Delfas spoke on FCA’s national and international response to Covid-19 and Brexit.
- FCA updated its Covid-19 information page for firms in respect of information security. The new information highlights the risks that cyber crime may render important business services unavailable, and the consequences that may have for firms, markets and customers. FCA says it expects firms to prioritise information security and ensure they have in place adequate controls to manage cyber threats and respond to major incidents. It also reminds firms of their obligation to report significant incidents; and
- ESMA has reminded firms of their conduct of business obligations under MiFID 2. Its statement focuses on the risks retail investors fact when trading in the current environment. Several national regulators have noticed increased market volatility and the consequent increase in risks. ESMA believes firms currently have even greater duties to act in the best interests of their investors than ever, particularly in terms of product governance, information disclosure, suitability and appropriateness.