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Coronavirus: FCA sets out guidance for firms to identify key workers

Out-Law News | 23 Mar 2020 | 6:25 pm | 2 min. read

The UK’s Financial Conduct Authority has issued guidance to financial services firms aiming to help them identify who is a ‘key worker’ during the coronavirus pandemic.

The FCA said a key worker at a firm regulated by the FCA, Payment Systems Regulator or both, as well as at financial market infrastructure operators, would fill a role which is necessary for the firm to continue to provide essential daily financial services to consumers, or to ensure the continued functioning of markets.

The children of key workers will be able to continue going to school in coming weeks. The FCA said it expected only a limited number of people to be identified as key financial workers.

Firms were best placed to decide which staff are essential for the provision of financial services, said the regulator in the guidance. It outlined a two-phase approach to identifying these key workers, saying firms should first identify the activities, services or operations which, if interrupted, are likely to lead to the disruption of essential services to the real economy or financial stability.

Firms should then identify the individuals that are essential to support these functions, as well as any critical outsourcing partners who are essential to continued provision of services, even where these are not financial services firms.

Financial regulation expert Elizabeth Budd of Pinsent Masons, the law firm behind Out-Law, said financial workers would also be essential to ensure stability.

“Although the news over the weekend regarding key workers focused on key workers in the health system and food ‘farm to fork’, clearly within in financial service services firms there are key roles that are required to ensure that the global and domestic financial services system continues to operate to ensure as much financial stability in turbulent times,” Budd said.

Budd said the FCA guidance followed the publication of shared policy documents on operational resilience published by the FCA, Prudential Regulation Authority and Bank of England last year. In the documents, the regulators said banks and insurers in the UK would be obliged to quantify the maximum level of disruption they will be able to tolerate to core services.

“Whilst regulators are sympathetic to the current extraordinary events the operational resilience consultation paper from December  made clear that firms need to address extraordinary events, and be able to adapt those plans as best as possible under any circumstances. It will be a failure to address and adapt that the regulator is likely to criticise at a future date,” Budd said.

The FCA recommended that firms with a chief executive officer (CEO) role should make that person accountable for putting in place an adequate process. For firms without a CEO, the best person would be the “most relevant member of the senior management team”.

The regulator said types of roles considered as providing essential services could include individuals captured by the Senior Managers Regime, individuals essential in the running of online services and processing, or essential to the running of branches and providing essential customer services.

Other key financial workers could include those essential to the functioning of payments processing and of cash distribution services, individuals who are essential in facilitating corporate and retail lending and administrating the repayment of debt, in the processing of claims and renewal of insurance, or in the operation of trading venues and other critical elements of market infrastructure.

Essential support for the outlined roles could also be covered, according to the FCA.

The regulator said firms should consider whether they should issue a letter to all individuals they identify as key workers that clearly identifies them as such and that can be presented to schools on request.