Coronavirus impact outlined as part of FCA business plan

The Financial Conduct Authority (FCA) has set out its business priorities for the year ahead – with specific focus on the challenges presented by the coronavirus (Covid-19) pandemic.

In responding to the challenge of coronavirus the FCA will focus on ensuring that financial services businesses give people the support they need, that people avoid scams, and that financial services businesses and markets know what we expect of them.

Alongside HM Treasury and the Bank of England, the FCA has already made a series of interventions at unprecedented speed to protect consumers, firms and the markets.

These have ensured that customers retain access to essential banking services and are able to benefit from flexibility on mortgage and other debt payments.

Throughout the pandemic, the FCA will:

• protect the most vulnerable – ensuring that they can get the financial services and the help they need
• tackle scams – helping consumers avoid the scams that spring up as the pandemic develops
• ensure fair treatment for consumers and small firms – making sure that firms give strong and clear support to customers, recognising challenges that everyone is facing
• keep markets working well – ensuring that markets remain orderly
• mitigate firm failures – mitigating the impact on consumers where firms fail in these challenging circumstances

Looking ahead to the medium term the Business Plan sets out four priority areas where the FCA will address continuing harm.

Aim to ensure that consumers:

• can rely on safe and accessible payments to receive their pay or benefits, settle bills and access cash
• do not get into unaffordable debt and are treated well if they do
• can make effective investment decisions about their savings, and are not exposed to risky or poor value products
• are offered fair value products in a digital age and are not at risk of being treated unfairly in the pricing and other terms they receive

The FCA is also focusing on transforming its operations. This includes looking at its entire system – from the data it collects, to how it analyses, manages and shares intelligence across the organisation, and how it decides which firms and individuals can operate.

It will also look at how firms are supervised, and how unacceptable firms and individuals are stopped and removed from the regulated sector as quickly as possible. To deliver these outcomes, the FCA will build its capacity by investing in skills, systems, people and technology.

The FCA will review its plans as the implications of coronavirus become clearer and provide updates as appropriate.

FCA Interim Chief Executive, Chris Woolard, said “In a matter of weeks, coronavirus has altered the UK’s financial landscape dramatically. At times like this, it is more important than ever that the FCA leads the way on the protection of consumers, firms and the markets. Our Business Plan recognises the impact of coronavirus on the financial services industry while looking forward at how we transform the FCA’s operations in the future.”

In response to the FCA’s business priorities, Alastair Douglas, CEO of TotallyMoney said “The new guidance from the FCA is a huge relief for many people. Having the ability to stop payments for three months means people can use the money towards essential spending during this time. The hope is that most banks and lenders will act responsibly to help those in need of a payment break due to the coronavirus.”

“Thursday’s (9th April) introduction of the newly confirmed guidelines means you can now take advantage of a payment holiday on your credit card or loan, should you need to. The banks are extremely busy at the moment, and it could take longer to get a response, so it’s a good idea to talk to your lender as soon as possible about your situation.”

“If you’re approved to take a payment holiday, you won’t need to make a payment for three months, and you won’t be charged a late payment fee. It’s so important for people to confirm with their bank or lender that they are able to take the break. If you miss a payment or simply cancel your direct debit before you’ve done this, it could appear on your credit report and impact your score, which could harm your ability to borrow in the future.”

“Once a payment holiday is in place, it’s a good idea to check your credit report regularly to make sure it’s not affecting your score, and it’s been implemented correctly. Banks and lenders are very busy at the moment, and operating with fewer staff, so it’s sensible to make sure nothing slips through the net, so you can quickly put things right if they do.”

Freddy Kelly, CEO and co-founder of Credit Kudos, said “We’re pleased to see the Financial Conduct Authority (FCA) highlighting consumer credit as a key area of focus – particularly around affordable credit and unaffordable debt. Unfortunately, many lenders still assess creditworthiness based on traditional credit report data which can be inaccurate and up to 60 days out of date. This means they might be turning down borrowers who could afford to repay, leading them to turn to higher cost credit, or that they are lending to people who won’t be able to make repayments.”

“Now, more than ever, it’s vital that people are able to access suitable and affordable credit. We welcome the FCA’s continued focus in this area and the continued review of creditworthiness assessments to ensure this market works well for borrowers.”