Legal Shorts 24.04.20 including FCA expectations for wet-ink signatures in light of Covid-19 restrictions

FCA expectations for wet-ink signatures in light of Covid-19 restrictions

On 20 April 2020, the FCA issued a statement setting out its expectations of firms when dealing with the need for ‘wet-ink’ signatures (i.e. signing a document by hand using a pen).

The FCA explained that in relation to agreements its rules do not explicitly require wet-ink signatures, nor do they prevent firms from using electronic signatures in agreements. The validity of electronic signatures is a matter of law. Firms should consider the legal position themselves.

Firms must also consider any related requirements set out in the FCA’s Principles for Businesses and general rules. For example:

  • Principles 2, 3 and 6 and review the risks and harms of using electronic signatures, and take appropriate steps to minimise those.
  • the client’s best interests rule (COBS 2.1.1R) and the fair, clear and not misleading rule (COBS 4.2.1R) to ensure that, when a client signs a document electronically, this does not make it more difficult for the client to understand what they are agreeing to.

On FCA forms, the FCA will accept electronic signatures for fund-related applications and on all applications from mutual societies and firms may use electronic signatures for all interactions with the FCA.



ISDA Electronic Signatures Opinions Portal

FieldFisher’s lawyers have been using their time during lockdown to extract from the ISDA E-Contracts Opinions which methods of electronic or remote execution of documents are permitted for companies in around 37 jurisdictions. They are now offering to ISDA members the output from that extraction exercise in the form of an Electronic Signatures Opinion Portal.

Whilst the ISDA Opinions specifically address the execution of various ISDA documents, the conclusions in most cases should be equally applicable to other documents governed by English and New York law, with a few caveats which they have sought to identify.

If you would like to make use of the Portal, please register here. As long as you work for an ISDA member firm, FieldFisher will accept your registration. The Portal is free of charge to users and with no obligation on you or your firm.




FCA “Dear CEO” letter to insurers

On 20 April 2020, the FCA sent a “Dear CEO” letter to insurers setting out its expectations in relation to the assessment, settlement and payment of claims to SMEs under business interruption policies.

The letter states that the FCA estimates most SMEs’ business interruption policies will offer only “basic cover” and will not cover pandemics, therefore insurers will not be obliged to pay out. It continued that whilst this is “disappointing for the policyholder”, it did not see any “reasonable grounds to intervene in such circumstances.”

The FCA did acknowledge that there will be policies under which there is an obligation to pay, and in those circumstances the FCA “requires firms to assess, settle and pay these claims quickly.” Where reasonable to pay part of a claim but not the full claim, the FCA has requested that firms adopt the approach of making an interim payment. If they disagree with this approach firms should inform the FCA of their grounds for reaching that decision.




ESMA issues new Q&A on alternative performance measures in the context of COVID-19

On 17 April 2020, ESMA issued a Q&A to provide guidance to issuers on the application of the ESMA Guidelines on Alternative Performance Measures (APM Guidelines) in the context of the COVID-19 pandemic.

The Q&A

  • highlights the main principles of the APM Guidelines;
  • encourages issuers to use caution when adjusting Alternative Performance Measures (APMs) and when including new APMs to address the impact of COVID-19;
  • invites issuers to provide:
    • narrative information regarding the modifications made, the assumptions used and the impact of COVID-19;
    • information on measures taken or expected to be taken by issuers to address the impact that the COVID-19 outbreak may have in their operations and performance.

The APM Guidelines address the information that issuers should publish when disclosing APMs (e.g. Operating Results, EBIT, EBITDA, Free Cash-flows) to the market in management reports, prospectuses and ad-hoc disclosures (such as Quarterly Earnings releases).




COVID-19: changes to Companies House strike off policy and late filing penalties

On 16 April 2020, Companies House announced temporary changes to its strike off policy and approach to late filing penalties to support companies affected by the COVID-19 outbreak in meeting their legal responsibilities.

The new measures include:

  • pausing the strike off process to prevent companies from being dissolved. It will continue to publish a notice in the Gazette, but will suspend any further action to dissolve the company in order to protect those who may wish to object to the company being struck off.
  • treating late filing penalty appeals sympathetically where the late delivery was caused by the COVID-19 outbreak; and
  • provide a break for companies to pay late filing penalties, as well as offering additional support with payment plans for late filing penalties.

Companies House stated that these policy changes are temporary, and will be kept under review and amended as necessary in light of the COVID-19 outbreak, building on the previous measures announced in March, under which companies can apply for an immediate and automatic three-month extension for filing their annual accounts if affected by COVID-19.



FCA updates its statement on expectations on financial resilience for solo-regulated firms

Firms prudentially-regulated by the FCA play an important role in supporting the functioning of the economy. The FCA expect firms to meet this responsibility by planning ahead and ensuring the sound management of their financial resources. This means taking appropriate steps to conserve capital, and to plan for how to meet potential demands on liquidity.

In its statement, the FCA confirmed its position on a number of matters, including:

  • firms which have been set buffers can use them to support the continuation of the firm’s activities and if a firm is planning to draw down a buffer, it should contact the FCA or its named FCA supervisor. 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. Firms should maintain an up-to-date wind-down plan that takes consideration of the current market impact of the coronavirus (Covid-19) crisis.
  • government schemes to help firms through this period can be part of a firm’s plans for how they will meet debts as they fall due.

If a firm is concerned it will not be able to meet its capital requirements, its debts as they fall due, or if its wind-down plan has identified material execution risks, it should contact the FCA or its named FCA supervisor, with its plan for the immediate period ahead.