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.
The UK authorities have published consultations with respect to the Basel requirements for banks. The Prudential Regulation Authority (PRA) published the consultation paper CP16/22 on rules for the implementation of Basel 3.1 standards.
The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.
The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.