Recent regulatory developments focussing on banking and finance. Updates include UK FCA finalised guidance on branch and ATM closures. See also our General regulatory news of relevance to all financial institutions.

Contents

• Branch and ATM closures or conversions: FCA FG20/3
• LIBOR discontinuation for business customers: UK Finance guide
• CRR: EBA study on credit institutions' disclosure of information related to ESG risks
• COVID-19: ECB temporary relief in banks' leverage ratio

Branch and ATM closures or conversions: FCA FG20/3

Following consultation, the UK Financial Conduct (FCA) has published finalised guidance, FG20/3, on branch and ATM closures or conversions. The guidance applies to regulated firms that operate (or have agents that operate) branches or ATMs, including banks, building societies and credit unions. It applies, with some limited exceptions, when such a firm proposes or takes a decision to close physical sites, or to convert a free-to-use ATM to pay-to-use. FG20/3 also includes feedback to the consultation.

The FCA expects firms to:

• keep it informed of any plans for closures or conversions in good time before any final decision is made. This will enable the FCA to monitor whether customers are being treated fairly;
• before making a final decision, provide a clear summary of their analysis of the needs of customers that are currently using the sites, the impact of the proposals on those customers and alternatives that are, or could reasonably be, put in place if they implement the proposals; and
• where they decide to implement their closure or conversion proposals, clearly communicate information to customers (including alternatives they can use) no less than 12 weeks before the proposals are implemented. This will give customers time to act, such as changing their banking provider if they wish.

The guidance applies from 21 September 2020. The FCA notes it is potentially relevant to enforcement cases and may be taken into account when considering whether firms could reasonably have understood or predicted that the conduct in question fell below the standards required by FCA Principles for Businesses 6, 7 or 11.

The FCA will review the guidance within 12 months, taking account of any legislative or industry developments in that time, and revising it, if appropriate.

LIBOR discontinuation for business customers: UK Finance guide

UK Finance has published a guide on the discontinuation of LIBOR for business customers. The guide, prepared with the Confederation of British Industry (CBI), is intended to help business customers with LIBOR-linked loans understand the discontinuation of LIBOR, why LIBOR is being discontinued and what business customers should expect to hear from their bank or lender in the coming months. Among other things, the guide includes a potential plan of action for businesses.

CRR: EBA study on credit institutions' disclosure of information related to ESG risks

The European Banking Authority (EBA) has published an online survey on credit institutions' Pillar 3 disclosure of environmental, social and governance (ESG) risks under Article 449a of the Capital Requirements Regulation (CRR). The survey is addressed to large credit institutions which will be required to disclose prudential information on ESG risks under Article 449a of the CRR.

The survey supports the EBA's mandate to develop draft implementing technical standards (ITS) specifying uniform disclosure formats and associated instructions for the Pillar 3 disclosure of prudential information on ESG risks. The feedback received will also be used to monitor the EBA's short-term expectation specified in its Action Plan on Sustainable Finance.

The survey comprises three main parts:

• Part 1: general questions on the current status of ESG disclosure;
• Part 2: questions on the interaction between Pillar 3 disclosure and policy initiatives; and
• Part 3: forward-looking questions regarding the implementation of future disclosure requirements under article 449a of the CRR.

The survey closes to responses on 16 October 2020.

COVID-19: ECB temporary relief in banks' leverage ratio

The European Central Bank (ECB) has adopted a decision on the temporary exclusion of certain exposures to central banks (such as coins and banknotes and deposits held at the central bank) from the total exposure measure, in view of the exceptional circumstances presented by COVID-19. Banks can benefit from the relief measure until 27 June 2021.

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