The Bank of England (the “Bank”), the Prudential Regulation Authority (the “PRA”) and the Financial Conduct Authority (the “FCA”) have announced a number of policies to mitigate the challenges faced by the UK financial services sector as a result of the coronavirus (“COVID-19”) outbreak and to clear the ground for firms to focus on leading the economic fight against the crisis.
This memorandum provides an overview of the policies adopted to date. We anticipate further measures and plan to update this memorandum as the situation evolves.
The regulators’ unanimous stance is that firms must strive to maintain business continuity and compliance. However, they are clearly sensitive to the burdens firms are facing as a result of the outbreak. Global and UK banks are more financially resilient since the financial crisis, but unlike the financial crisis, the COVID-19 crisis is directly endangering multiple sectors of the real economy, especially small and medium-sized enterprises (“SMEs”). Whereas operational resilience has also been a policy focus in the post-financial crisis period, many firms’ business continuity plans will not have contemplated the scale of disruption caused including significant numbers of the staff of institutions across the industry having to work from home whilst dealing with significant upheaval in their personal lives. The adopted measures, which cover a range of policy areas such as regulatory capital, bank stress tests, IFRS 9, responding to distressed consumers and market trading and reporting, are aimed at allowing firms to prioritise:
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