On 31 March 2020, the Financial Sector Conduct Authority (FSCA) published FSCA Communication 12 of 2020 which outlines the expectations of the FSCA regarding the culture and main responsibilities of financial institutions during the COVID-19 crisis. The Communication warns that entities must ensure that all customers are treated fairly during the entire product cycle and that profiteering off those that are vulnerable, and suffering will not be tolerated. Some of the expectations include:
The publication states that it is expected that all entities have reviewed their own business continuity plans and assessed the impact of the COVID-19 on their operational ability. The FSCA advises that if any major risks have been identified as a result of the COVID-19, which could materially impact fair outcomes to customers, the entities should immediately communicate this risk, the impact thereof and mitigation plans to the FSCA.
The FSCA advises that entities must try to avoid delays in settling any claim, including funeral claims. Where delay is unavoidable, any time delays must be clearly and pro-actively communicated to customers together with the reasons for the delay and expectations must be managed. The FSCA further advises that any policy exclusions that are impacted by the COVID-19 must be clearly communicated to all current and potential policyholders as soon as the impact has been identified by the insurer.
Advisors and Intermediary Service Providers
Advisors have a key role to play in assisting customers in understanding the market and the impact of COVID-19 on insurance, investments and savings products. The FSCA stated that it therefore expects advisers to stay abreast of developments and with product suppliers so that they can provide customers with suitable advice. Many advisers are also the holders of outsource and binder delegations from product suppliers and are expected to comply with all requests from product suppliers which enable them to meet their oversight responsibilities.
The FSCA expects asset managers and CIS managers to appropriately manage liquidity risks that COVID -19 brings to the portfolios while enabling investments that can benefit investors and the wider economy. CIS Managers must continue to apply risk management requirements and related obligations.
All financial institutions
The FSCA reminds all entities that the necessary due diligence, monitoring and control over all third parties should remain intact and alternative measures to ensure fair outcomes to customers should be considered during this difficult time. Entities must take additional measures to inform and educate intermediaries of any changes to processes, procedures and products and ensure that the necessary communication is sent in this regard. The intermediaries should be made aware of any changing circumstances which might impact the suitability of their advice.