Shearman & Sterling LLP | FinReg | UK Conduct Regulator Update on COVID-19 Response and 2020 Expectations
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  • UK Conduct Regulator Update on COVID-19 Response and 2020 Expectations

    The U.K. Financial Conduct Authority’s Executive Director of Supervision for Investment, Wholesale and Specialists, Megan Butler, has given a speech setting out the FCA’s current priorities, its expectations of firms during the COVID-19 pandemic and the outcomes it is focusing on for the wealth management sector, as well as the future priorities for financial regulation.
    The FCA initially prioritized immediate relief for firms and consumers, including on mortgages and unsecured lending products, at the outset of the COVID-19 crisis, but is now looking at how it will respond to the challenges of COVID-19 on a more long-term basis. This longer-term approach includes ensuring a good level of operational resilience (in line with the FCA’s ongoing consultation on that topic), that markets can continue to function well, that customers are treated fairly and protected from scams and that the FCA understands firms’ financial resilience so that they can fail in an orderly manner.
    Key outcomes for the wealth management sector are:
    • the protection of client money and custody assets;
    • the provision of suitable advice and discretionary investment decisions;
    • that firms act with integrity and charge appropriate fees for their services; and
    • the prevention of financial crime and market abuse.

    The FCA has also identified particular practices which it intends to clamp down on, including “lifeboating” (the practice of setting up new entities and applying for authorization before complaints at existing entities have crystallized) and “phoenixing” (the practice of closing down companies and setting up new ones to avoid liabilities).

    Looking forward, the FCA intends to focus on the outcomes it intends to achieve in responding to changing circumstances including Brexit, developments in technology and data and the changing macroeconomic climate. It will also review its regulatory system, including the type of data it collects, how it decides which firms to supervise and how it supervises them.

    View Megan Butler's speech.

    Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
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