It has also agreed, along with the Prudential Regulation Authority (PRA) and Financial Reporting Council (FRC) a two-month extension to annual accounts reporting for listed companies.
In a statement published today, the FCA said it wanted to see firms continue operating in this challenging period and where it can it intended to provide flexibility to regulated firms to ensure this.
“Capital and liquidity buffers are there to be used in times of stress. Firms who have been set buffers can use them to support the continuation of the firm’s activities,” it said.
“Firms should be planning ahead and ensuring the sound management of their financial resources. If the firm needs to exit the market, planning should consider how this can be done in an orderly way while taking steps to reduce the harm to consumers and the markets.”
It added that using government schemes to help navigate this period can be part of a firm’s plans for how it will meet debts as they fall due.
Firms with concerns should contact their FCA supervisor and those regulated by the PRA should consider its requirements and discuss concerns with the PRA.
For firms with annual reporting requirements the trio of regulators have agreed to relax restrictions around timescales and also noted that there may be a need to change the content.
These changes are likely to include:
- Modified audit opinions where auditors have been unable to gather the necessary audit evidence to complete the audit in full: for example, by limiting the scope of the audit opinion.
- Given the uncertainty about the immediate outlook for many companies, more audited financial statements that include disclosures that management is aware of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern.
- Changes to timetables for publication of financial information that had been set before the full implications of coronavirus were clear.
“We recognise that some companies, given the nature of their operations, may feel it appropriate to maintain the four-month calendar, but we would urge all those companies that feel it appropriate to utilise the additional two months to do so,” the regulator said.
“We urge market participants not to draw undue adverse inferences when companies make use of the extra time our temporary relief gives them.
“For a great many companies it will be a sensible decision to make in unprecedented times,” it added.
‘Logic and pragmatism’
SimplyBiz Group chairman Ken Davy said: “I was delighted to see that the FCA has promised flexibility in its approach to the capital adequacy requirements of financial advice firms who are facing additional challenges as a result of the current coronavirus crisis.
“I would like to congratulate the regulator on taking such swift, and necessary, action.
“This common sense approach is much needed, and applies logic and pragmatism to what is an incredibly difficult situation for all, including advisers and their clients.”