The MFSA has published guidance and regulatory updates on the COVID-19 outbreak and its effects on the financial services sector.
This is piece forms part of a series of COVID-19 updates published by our firm in response to developments around the pandemic. For more on this series, please see here.
Licensed entities are expected by the MFSA to:
- take all reasonable measures to ensure they have appropriate business contingency plans ('BCPs') in place to deal with any eventuality relating to the outbreak of COVID-19;
- consider the impacts of COVID-19 on their BCPs;
- review, update and test their BCP in light of the current outbreak.
The MFSA highlights that BCPs must be communicated to all stakeholders and employees and any disclosure on contingencies adopted should be posted on the licence holder's website. Licence holders who do not have adequate BCPs are to notify the MFSA without any delay.
The MFSA is also mindful of the adversities faced by licensed entities in effectively responding to unprecedented challenges in terms of ensuring operational continuity, whilst also adhering to their regulatory obligations.
Additional information published by the MFSA includes guidance on the following areas:
Guidance on regulatory submission deadlines - The MFSA has issued a detailed circular listing the deadlines applicable for each form of regulatory filing, and considered the necessity of extending upcoming reporting deadlines. Reporting deadlines due in May or June will remain in place for the time being, although the MFSA will consider extensions in warranted situations assessed on a case by case basis. The MFSA also communicated that it reserves the right to apply a more stringent approach to the accepted delays from those outlined in the circular and that its approach might change as a result of developments both at a local and EU level.
Processing of physical documentation - The MFSA has also issued a separate circular on interim measures for the processing of physical documentation by all entities that are licensed, registered, enrolled, recognised or authorised in any form by the MFSA, as well as applicants and prospective applicants. With immediate effect, all documentation should be submitted electronically as part of the financial regulator's contingency and business continuity planning.
Regulatory submissions, such as audited financial statements, can be enclosed to an email from each director confirming that the accounts were approved by the respective director. Original signed documents, certified true copies and any other documentation that is ordinarily submitted to the Authority in physical format will be expected to be submitted retrospectively at a future date when communicated by the MFSA. Similarly, the MFSA is making available all documentation (such as documents related to authorisations, supervision and enforcement) electronically.
Guidance for consumers - Another regulatory update concerns a set of guidelines issued to consumers, outlining the measures the MFSA has put in place to safeguard their interests. The MFSA's priority is to ensure that authorised firms have contingency plans in place to keep offering their services as close to normal as possible but also continue to treat customers fairly.
Any consumers who are considering either investing, buying or selling an investment, the MFSA is recommending that caution is applied in taking these decisions in times like these, since information may be outdated in a matter of days and forecasts may prove unreliable. It is highly recommended that investors consult a licensed financial intermediary before investing. Insurance policy holders are being guided on the various measures which are being taken by the MFSA in relation to the different types of insurance policies which could be affected by the COVID-19 outbreak. To this effect, a separate circular has also been issued, addressing in more detail the levels of coverage for each type of insurance and the applicable terms for the most common situations faced by policy holders, as a result of the current pandemic.
Complaints handling - the MFSA has urged firms to have complaints handling measures in place and if necessary, to provide ad-hoc training to client-facing staff. All firms should have a customer communication strategy and plan in respect of its customers in the event of serious disruption to its business, products or services as part of its business continuity plan.
Fraud alerts - The MFSA has alerted the general public of fraudulent schemes or financial scams which may try to take advantage of the COVID-19 outbreak to misappropriate funds or obtain sensitive personal information. The MFSA in its press releases encouraged regulated firms to follow regulatory updates regarding the COVID-19 situation on the MFSA's official website which will be updated frequently.
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