Using electronic signatures
As part of its support for regulated firms during the COVID-19 crisis, the FCA has updated its website and issued guidance on the requirements around getting “wet-ink signatures” (i.e. signing a document by hand using a pen) for client or other agreements and when submitting FCA forms. FCA rules do not explicitly require wet-ink signatures for agreements or prevent firms from using electronic signatures and the guidance provided notes that the validity of electronic signatures is a matter of law.
However, firms are reminded, if using electronic signatures, that they should review the risks and harms of electronic signatures and take appropriate steps to minimise those risks in accordance with Principles 2, 3 and 6. Additionally, firms should think about the “fair, clear and not misleading” Conduct of Business rules if electronic signatures are used. In doing so, firms should not make it more difficult for clients and consumers to understand what they are agreeing to. As part of those considerations, firms may wish to take independent advice on the legal position of their arrangements. Firms should also be mindful of the rules on record retention and ensure that their arrangements meet the required standards for storage and retrieval.The FCA have also confirmed that firms may now use electronic signatures when submitting relevant notifications and forms.
Gabriel Reporting Periods Extended
Temporary measures for submitting regulatory returns were also introduced on 22/04/2020 for certain returns that are due for submission up to and including 30th June 2020.
A 1 month extension applies to number of financial returns, but not all. Those included are:
• COR001A (Own funds)
• COR001B (COREP Leverage Ratio)
• COR002 (COREP LE)
• COR003 (COREP NSFR)
• COR005 (Asset Encumbrance)
• FRP001 (FINREP)
• FSA004 (Breakdown of Credit Risk Data)
• FSA005 (Market Risk)
• FSA007 (Operational Risk)
• FSA008 (Large Exposures)
• FSA014 (Forecast Data from Firms)
• FSA017 (Interest rate gap report)
• FSA018 (UK integrated group - Large Exposures (UK integrated group))
• FSA019 (Pillar 2 Information)
• FSA055 (Systems and Controls Questionnaire)
• REP005 (High Earners Report)
• RMA-D2 (Financial Resources)
And 2-month extensions have been granted for:
• Annual report and accounts (FIN-A) returns
• Annual financial reports (as required under Disclosure Guidance and Transparency Rules)
• Credit union complaints return (CREDS 9 Annex 1R)
• Complaints return (DISP Annex 1R)
• Claims management companies complaints return (DISP 1 Annex 1AB)
For the avoidance of doubt, the relevant reporting extension is effective from the date the report was originally due. For example, a return due on the 22 May will now be due on the 22 June (1 month extension) or 22 July (2 month extension) . If the extended deadline date happens to fall on a weekend, the submission should be made by the next working business day. Administrative fees for late returns have been waived until 30 June 2020 (this also applies to any returns not listed below) for small or medium-size businesses (paying less than £10,000 in fees and levies in 2020/2021).
Firms are still expected to complete returns as soon as possible and late reminder letters will still be sent by the FCA if deadlines are missed.
Employers’ Liability Register compliance returns will not be required to be submitted for 2020.
Qualification time limit extensions
The FCA has updated its guidance for explaining how employees obtain the appropriate qualifications in the light of examinations being cancelled due to the COVID-19 pandemic. While firms must still ensure that all employees have the skills, knowledge and expertise needed to discharge their responsibilities, the FCA has confirmed that it will not take action against firms or individuals where an accountable individual has not be able to attain an appropriate qualification with the required 48 month period (TC 2.2A.1R) because the relevant exams were cancelled or postponed. This will apply in circumstances either where an exam provider cancelled or postponed registered/booked exams or where the employee was required by the firm to postpone in order to carry out extra duties to manage risks, or provide support to consumers or the business.
Affected employees will have an additional 12 months to complete the appropriate qualifications. Where firms assess that an extension applies, they should record the reasons for this.
The FCA will adopt this approach until 31 October 2020, meaning firms may apply a time limit of up to 60 months where examinations were cancelled or postponed, up to and including 31 October 2020.
To discuss any queries relating to FCA guidelines around electronic signatures, Gabriel returns or exam qualification extensions, please contact Andrew Jacobs.