I want to reflect for a moment on the Covid-19 crisis so far, before turning to the challenges to come, not least the vital role the investment management industry could play as we look beyond the immediate crisis, through what may be tough conditions to come, to something approaching recovery.
As you know, alongside the Treasury and the Bank of England, the FCA has been trying to build a bridge across the economic aspects of the Covid-19 crisis to ensure that consumers and firms can come through the other side in the best shape possible.
We moved quickly to provide the regulatory environment in which financial services firms could concentrate on serving their customers by delaying and deferring regulatory change where we could.
Over the past few weeks I have heard from a number of people that it is in this crisis that the FCA has ‘found its feet’.
Leaving aside the suggestion that we had ever lost them, there is much to be proud of that we have been able to do, often working together with financial firms, trade associations, debt charities and consumer organisations, including many of the people on this call.
We moved quickly to provide the regulatory environment in which financial services firms could concentrate on serving their customers by delaying and deferring regulatory change where we could.
We promoted the smooth running of the financial markets so businesses continue to have access to raise money and support jobs. We provided clarity on our expectations of those listed companies that need to turn to capital markets. We have also – along with colleagues in Europe, the US and in Hong Kong – been strong advocates for these markets remaining open.
All of this has been made possible by changes in the way the FCA works as an organisation. We have embraced quicker, more nimble decision making and flexibility in resourcing.
And, like all of your members, we have drawn on the hard work and experience of years to manage the crisis and make us a more operationally resilient organisation. Without that focus – both internally and externally – the move to home working would have been impossible.
The resilience of investment management during the crisis
Overall, the fund management industry showed considerable resilience in the face of volatile market conditions.
While suspension is in the best interest of investors, this crisis, like the aftermath of the Brexit referendum, shows the difficulty for these funds of maintaining a promise of daily liquidity to investors when their assets are inherently illiquid.
There has been considerable discussion about how to ensure redemption arrangements offer a fair deal to those remaining in the fund as well as those who wish to exit. We will look to consult later this summer, in a genuinely open way, on whether long-term investor interests would be better served by finding a way in which these funds could safely transition to a structure in which liquidity promises to investors are better aligned with the liquidity of fund assets.
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