EC published a list of best practices agreed by the financial sector, and consumer and business organizations, to help further mitigate the impact of the COVID-19 pandemic. These best practices relate to the relief measures in the context of the COVID-19 crisis and concretely set out the ways in which different market participants can support citizens and businesses throughout the crisis. The best practices cover several issues such as payment moratoria for consumer and business loans and for insurance contributions, facilitation of safer cashless payments, ensuring "swift" provision of loans aimed at mitigating the impact of pandemic, and quick processing and payout of legitimate insurance claims. The published best practices are intended for insurers and for bank and non-bank lending to consumers and businesses.
The best practices encourage banks and non-bank lenders to demonstrate flexibility toward their business clients experiencing financial difficulties in the context of COVID-19 crisis. Banks and non-bank lenders should endeavor to provide a fast and easy procedure for granting the deferral and the moratoria (online where possible). Banks and non-bank lenders are encouraged to ensure that no excessive fees or interest rates are charged for the special loans, beyond what can be considered a fair fee and fair interest rate, reflecting market conditions and credit risk assessment. For a more streamlined process of granting loans under the public or private guarantee scheme, banks and non-bank lenders are encouraged to contribute to the optimal use of these schemes as follows:
- Work closely with the national and regional guarantee institutions as well as the government bodies to ensure that the potential clients are well-informed about the government requirements and any inconsistencies are flagged early
- Ensure that the credit secured by the public guarantee granted to businesses follows as much as possible the conditions set out in the scheme, taking into account the bank’s duties under the scheme and its compliance with supervisory requirements
- Work with borrowers to seek a solution in individual cases of requests for information or redress with the use of mechanisms such as ombudsman, where they exist.
This list of best practices follows two roundtable meetings facilitated by EC with consumer and business representatives, European banks, other lenders, and the insurance sector. The discussions involved participation from over 25 organizations and are part of a wider effort by EC to increase lending to the real economy, including a banking package that was adopted in April 2020 in response to the COVID-19 pandemic. While recognizing that there may be limits set by competition law and prudential regulations for the private sector to provide certain relief measures, participants in the meeting agreed to make the necessary effort to inform and encourage their members to implement, whenever appropriate, on a best-efforts basis, these best practices. These practices should be temporary and applied as long as they are still relevant depending on the situation in member states. EC will facilitate a further roundtable in September to take stock of progress and will continue the dialog with stakeholders to support lending during the recovery. All participants are encouraged to follow these best practices.
Keywords: Europe, EU, Banking, Insurance, COVID-19, Loan Moratorium, Credit Risk, Payment Deferrals, Insurance Claims, Loan Guarantee, EC
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
APRA announced that it is resuming consultation on the confidentiality of data submitted to APRA by the authorized deposit-taking institutions.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
ESMA announced that it will recognize three central counterparties (CCPs) established in the UK as third-country CCPs, from January 01, 2021.
PRA published Version 02.04 of the PRA110 liquidity metric monitoring tool (PRA110 LMM tool).
FSB confirmed the Regulatory Oversight Committee (ROC) of the Global Legal Entity Identifier System (GLEIS) as the International Governance Body for the globally harmonized identifiers used to track over-the-counter (OTC) derivatives transactions, with effect from October 01, 2020.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.
EBA launched the seventh annual transparency exercise for banks in EU.
The EBA Single Rulebook question and answer (Q&A) tool updates for this month include answers to 32 questions.
MAS published amendments to the Notice 652 on net stable funding ratio (NSFR), along with the related reporting template.
EC published the action plan to enhance the Capital Markets Union in EU over the coming years.