In response to the coronavirus (“COVID-19”) crisis, on 19 March 2020, the UK government published guidance asking parents to keep their children at home, wherever possible, but has asked schools to remain open and provide care for a limited number of children whose parents are critical to the response to COVID-19 and who cannot be cared for safely at home. On 20 March 2020, the Financial Conduct Authority (“FCA”) subsequently provided further guidance to parents who work in financial services and who are needed for the provision of essential financial services (“key financial workers”).
The FCA has clarified that a key financial worker is a person who works at a firm that is dual-regulated, FCA solo-regulated, regulated by the Payment Services Regulator, or is an operator of financial market infrastructure. It would also be a person who “fulfils 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 FCA expects that only a limited number of people will be identified as being key financial workers, but has left it to the discretion of firms to decide which staff are “essential for the provision of financial services.” It has, however, helped firms by explaining that they should start by identifying the activities, services or operations that would, if interrupted, result in the disruption of essential services to the real economy or financial stability. Firms should then identify the individuals who are essential to supporting those functions and any critical outsource partners who are essential to the continuity of providing services, even if those partners are not financial services firms.
It has also recommended that the Chief Executive Officer Senior Management Function (SMF1, or the most relevant member of the senior management team if the firm does not have an SMF1) should be accountable for ensuring that there is an adequate process, so that only roles meeting the definition of key financial workers are designated accordingly.
The types of roles that the FCA considers as providing essential services might include the following individuals who are:
- Conducting risk management, compliance, audit and other functions necessary to ensuring that the firm meets its customers’ needs and its obligations under the regulatory system;
- Essential to the overall management of the firm, such as those under the Senior Managers Regime;
- Essential to the running of online services and processing;
- Essential to the running of branches and providing essential customer services, for example those handling with consumer queries (including via call centres), client money and client assets, and those maintaining access to cash and other payment services;
- Essential to the functioning of payments processing and cash distribution services;
- Essential to facilitating corporate and retail lending, and the administration of the repayment of debt;
- Essential to the processing of insurance claims and the renewal of insurance;
- Essential to the operation of trading venues and other critical elements of market infrastructure; and
- Providing essential support to allow the functioning of the above mentioned roles, such as those working in finance or IT.
Additionally, the FCA has suggested that firms may want to consider issuing letters to parents who are affected to identify them as being key financial workers, which could then be presented to schools upon request. Suggested wording by the FCA for those letters includes the following sentence: “the individual has been designated as a key worker in relation to their employment by [firm name]”, and then signed by someone with appropriate authority (which, under the circumstances, may have to be done electronically instead of in person and printed in accordance with each firm’s policies).
The FCA’s guidance concludes by reminding firms to continue to follow the government’s guidance closely and taking the steps it recommends.