Within hours of its official launch on Monday morning, the UK government’s “Bounce Back” loan scheme saw thousands of applications from small businesses looking for funding.
Executives at major banks underwriting the loans and online application forms said that they were experiencing “significant” demand for the loans as the programme opened.
David Oldfield, CEO of commercial banking at Lloyds Bank, said that his bank had received 5,000 applications before 10am, and Matt Hammerstein, chief executive of Barclays Bank UK, told the Treasury Select Committee that Barclays had received 200 applications in just the first minute.
Announced a week prior, the Bounce Back loan scheme was launched following criticism that government aid was taking too long to reach small businesses. The Coronavirus Business Interruption Loan Scheme (CBILS) has received particular attention, as critics claimed that its requirement for banks to assess businesses’ viability for the loans resulted in delays and the rejection of applications from numerous vulnerable companies.
The new “Bounce Back” scheme, which Oldfield described to MPs as having been “built around simplicity”, offers small businesses state-backed loans of up to £50,000.
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Oldfield assured MPs that “Whatever someone applies for within that range, subject to it being no more than 25% of turnover, then we will do no further checks other than the fraud checks,” to ensure a fast transition of funds.
Regarding the 200 applications that Barclays received upon the opening of the scheme, Hammerstein said that they were approved “within minutes” and that the requested funds should reach applicants “over the course of the next 24 hours”.
Many are choosing to wait out the trouble and see what happens rather than selling their home for somewhere new. But with Brexit resolved (at least on paper), and the country coming to terms with lockdown and looking forwards the future, there may be a level of certainty soon returning to the market now could be the perfect time to look into selling again. If you are planning on selling up, here are some key things that you need to know.
It can’t be denied that COVID-19 has been disastrous for the housing market. It is not so much that demand has seen a dip, rather that the market has gone into deep freeze - everyone looking to buy or sell is looking to wait until some sort of certainty returns. However, life goes on and increasingly it will be necessary to understand how to get on with things in spite of the coronavirus.
It seems that lockdown won’t actually have a huge effect on house prices - demand for properties is still there, it is just currently frozen. So if you are thinking of selling, you need to be getting ready in spite of the restrictions of lockdown. Things can change quickly, and it may soon be the case that the market returns to a level of normality.
It might seem like a lifetime ago, but no matter what you think about Brexit, there is no doubting the uncertainty surrounding the UK since the vote to leave. This has created a great sense of trepidation in terms of people being interested in investing their money, and buying property. Now the UK is officially leaving the EU, we can expect to see the market stabilise and confidence return.
Over the course of deciding the terms of Brexit there have been instances of house prices falling and people being reluctant to buy. The return to certainty – whether it is good in the long-term or not – should provide some relief to the property market, and make 2020 a good time to sell.
Now the UK is officially leaving the EU, we can expect to see the market stabilise and confidence return.
In 2020, the range of estate agent options that you have available is larger than ever. In general, estate agents now fall into two separate categories: those with a physical presence in the form of high street stores, and those who operate purely online.
There is no doubt that online agents generally offer a cheaper service – some, such as Purplebricks, charge a simple one-off fee and do not take commission. However, it is important to understand that you will get less in the way of services from them. Standard estate agents charge more but will typically do more to get your property sold.
In the past, we have seen many homeowners take a ‘wait and see’ approach to selling their property. This sees them listing it at a very high price, hoping that someone will fall in love with the property and pay over what it is worth.
However, if you are looking to make a sale, this isn’t a wise move. It is a much better idea to set a realistic asking price. The process of selling can be drawn out enough without the challenge of overcoming an overly high price tag.
First impressions matter when it comes to selling a home, so there is no doubt that you need to think about the exterior of your property. Your home needs kerb appeal – when someone sees it for the first time, are they impressed or disappointed? If it is the latter then you need to prioritise making changes.
There are actually many ways to enhance your kerb appeal. But it is important to think about the specifics of your property – what really needs changing? Some homes could do with a new paint job, others would benefit from replacing an old, rusty garage door. Take a look at your home objectively, and ask yourself what is detracting from the overall look.
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65% of homeowners renovate their kitchen before they sell. There is a good reason for this. The kitchen is seen as the focal point of the home, and it is somewhere that buyers will be drawn to, and will want to inspect. If your kitchen is looking a bit tired, now is the perfect time to make upgrades and improve the value of your home.
If you only have the budget to make home improvements in one area of the house, then it is definitely worth making that area the kitchen. Your budget will go a long way – replacing cupboard doors and handles can freshen up the whole look of the kitchen without breaking the bank.
The property market is certainly looking up, so now could be the perfect time to put your home up for sale. Be sure that you present your home in the best possible way – you might be surprised just how much of a difference this makes to the amount of money you can get for it.
Michelle Shelton, Product Planning Director at MHR, explores how crisis management can be improved through automated solutions.
In any business, people are your biggest asset and your biggest cost.
It is why amid the turmoil of the coronavirus lockdown, business continuity has rightly focused on providing full support to millions of employees working from home.
The danger is that functions such as payroll and HR find themselves overlooked or overburdened. There’s often an assumption that these departments run on rails no matter what happens.
When almost everyone works from home, however, payroll and HR can be overwhelmed by the volume of queries about pay, expenses, bonuses, commissions, and the limitless range of concerns employees have about sickness pay, curtailment of earnings, family matters, and so on. This is compounded by changes in government legislation or rules about furlough or holidays that need to be considered. What is the right response from a technology perspective?
It is imperative, therefore, that payroll and HR staff have access to the applications they use daily, so basic functions remain operational and they continue communicating across the business. But many organisations have found, to their cost, that remote working is not just a matter of lifting and shifting from the office to the home. A survey of companies with more than 1,000 employees last year found 52% were still using spreadsheets for payroll admin and more than a third were using paper timesheets. This is almost impossible to run effectively with a remote workforce. Businesses that have bespoke payroll systems operating from on-premises servers are suffering almost as badly, because these vital applications are now inaccessible.
The plain fact is that for many company payroll and HR departments there will be no alternative to the adoption of new, cloud-based applications that boost collaboration and streamline efficiency.
Implementation is swift. A major software and outsourcing provider with 650 employees has been able to shift to full remote working in three days, transacting more than 50 payroll functions quickly and seamlessly.
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A good example, from more normal times, is Swinton Insurance, which has 4,000 employees across the UK. It saved 132 working days through automation of absence authorisation and the introduction of digital payslips, having previously depended on spreadsheets. All the difficulties of employee queries and the confusion about the combination of pay and benefits were resolved through adoption of a cloud platform. The company’s HR department made the transition from a highly transactional unit to one helping drive up performance across the business.
Payroll and HR should also consider deploying chatbots and virtual assistant-type voicebots to help relieve them of the time-consuming burden of repetitive queries about pay and employment matters when employees are stuck at home. Within 24 hours it is possible to have a chatbot capable of answering 50 common queries. A more advanced cloud-based platform will offer these technologies. Employees can even upload receipts with a quick smartphone photograph, automating the administration of expenses claims and making the whole process much easier.
The banking and finance sector has provided over £4.1 billion to SMEs so far through the Coronavirus Business Interruption Loan (CBIL) scheme, UK Finance revealed today, as part of a broad package of support to help businesses through these tough times.
Over £1.33 billion of loans have been approved in the week from 21 April to 28 April 2020. The number of loans provided through the scheme has increased by 8,638 over the same period to a total of 25,262, an increase of over 50%.
The banking and finance sector is providing a range of support to SMEs to ensure they can receive the help most appropriate to their needs, including capital repayment holidays, overdrafts, working capital extensions and asset-based finance.
Lenders have received 52,807 completed applications under the CBIL scheme so far. 25,262 of these applications have been approved to date, while more applications are still being processed and are expected to be approved over the coming days.
Following reforms to the CBIL scheme introduced this week by the Treasury and British Business Bank, supported by regulators, the largest lenders have announced they will not require forward-looking financial information and will only ask businesses for information and data they might reasonably be able to provide at speed. This should streamline the application process and help lenders provide financing to businesses who need it as quickly as possible.
The banking and finance sector is providing a range of support to SMEs to ensure they can receive the help most appropriate to their needs, including capital repayment holidays, overdrafts, working capital extensions and asset-based finance.
The British Business Bank approved four more lenders for accreditation under the CBIL scheme this week, bringing the total number of accredited lenders to 52. This means businesses can now access financial support under CBILS from a wide variety of firms.
The industry is also working closely with the Government and regulators to deliver the new Bounce Back Loans scheme which will make it quicker and easier for smaller businesses to apply for and access the finance they need.
Stephen Jones, Chief Executive of UK Finance, said: “The banking and finance sector recognises the role we must play in getting the country through these tough times, and staff are working incredibly hard to get money to those viable businesses that need it.
“More than £4 billion has been delivered to over 25,000 businesses so far through the CBIL scheme, as part of a broad package of support for SMEs including capital repayment holidays, extended overdrafts and asset-based finance.
“The changes to the scheme announced by the Chancellor this week will enable lenders to streamline their application processes and help even more businesses access the support they need.
“This extensive support will be complemented by the new Bounce Back Loans scheme targeted at smaller businesses, which lenders are now working at pace to get up and running from Monday.”
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Chosen Care Group ltd, which provides domiciliary care to elderly and vulnerable people in their own homes across Essex, received a £1 million loan from Barclays through the CBIL scheme. The loan will help allow Chosen Care Group ltd continue to provide valuable in-home care during the COVID-19 crisis. The company of 240 employees was nominated for the Great British Care Awards in 2018.
London Drum Company, a supplier of drum and percussion instruments based in Deptford, saw a significant drop in income after gigs and concerts across the world were cancelled or postponed due to COVID-19. The company received a large loan from HSBC UK under the CBIL scheme, which has enabled it to replace its lost income streams and purchase new equipment for its workshop space, an area of the business that can continue to grow despite the current climate. This will help put the business in a strong position to support the UK music industry when the government restrictions are lifted.
Pallet Plus is a logistics company in Colchester, Essex, with 48 employees and a fleet of 28 vehicles. The company has enabled the transport of vital goods throughout the pandemic including Personal Protective Equipment (PPE), medical consumables and ventilators for delivery to the NHS and care homes, as well as goods to supermarkets. Pallet Plus also helped to deliver a donation of Easter Eggs given by the confectionary company Mars to NHS hospitals throughout the UK. The company received a £250,000 overdraft facility from Santander UK under the CBILS scheme, to reduce the impact on their business of potential losses caused by an increase in staff sickness or a decline in trading.
The Regency Corporation runs 20 pubs across Sussex, each of which are run independently and tailored to the local community they are based in. The company secured a £250,000 loan from Lloyds Bank through the CBIL scheme after having to shut its pubs and furlough its 150 employees due to the COVID-19 lockdown. The loan will boost cashflow, meaning the business can pay its suppliers and its staff until its furlough grant is received from the government.
SXS Events Productions Limited, a corporate events company based in Bristol, has had to furlough non-essential staff as events have been postponed until later in the year. The firm recevied a £170,000 loan from NatWest through the CBIL scheme. This loan will give the business as long as possible to plan ahead for when events are rescheduled.
Income Analytics today announces the launch of its tenant income risk indices and benchmarks – a new and unique set of indicators for quantifying tenant income risk using data on over 355 million global companies from leading global provider of business decisioning data and analytics, Dun & Bradstreet.
Income Analytics redefines how the global real estate industry can access, analyse and deploy company credit data on tenants, real estate assets and investment portfolios, enable real estate professionals, investors and lenders to receive ‘real time’ analysis of underlying tenants creditworthiness and, with confidence, appraise anticipated future performance and ultimately likelihood of default.
Income Analytics reports and dashboards incorporate new proprietary analytical tools and scoring (INCAN scores) alongside the existing credit report data including:
As a global institutional asset class (US$30.2trn1), real estate requires the same analytical analysis as equities and bonds. As stated by Andrew Baum, Professor of Practice, Said Business School, University of Oxford: “The value of real estate investment is ultimately determined by the level, duration and quality of the rental income paid by your tenants.”
Income Analytics provides a range of tools comprising:
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Matthew Richardson, Co-founder and Chief Executive Officer of Income Analytics commented: “At Income Analytics, we have created a truly unique and much needed set of tools and analytics for the global commercial real estate industry. No industry specific product for investors and lenders to assess and monitor the changing quality of their tenant income over time currently exists. More worrying is that very little has changed since the sub-prime crisis of 2008 and the recent global crisis caused by Coronavirus makes the need to access accurate and current income data more important than ever before. Our aim is to provide the real estate industry with a critical tool in which to assist investment decisions and investor reporting.”
Maxwell James, Chairman of Income Analytics stated: “Income Analytics has created a new and world class set of indices and benchmarks for the commercial real estate market. The insight that these measures bring is already resulting in better informed investment decisions by our existing clients. The application of these analytical methods offers the potential for investors and lenders to greatly enhance transparency and risk appraisal of portfolios or loan books at this critical time.”
Edgar Randall, Commercial Director UK & Ireland, Dun & Bradstreet commented: “Dun and Bradstreet is delighted to be partnering with Income Analytics to provide commercial data and analytics that support innovation and digital transformation across the real estate industry. Our aim is to provide a comprehensive risk solution for commercial real estate teams by combining our data with Income Analytics’ expertise and new platform to deliver actionable insights to drive business performance.”
Income Analytics was founded by and is led by an award-winning management team with unique experience and a strong track record in data monetisation and analytics in the commercial real estate sector. Biographies can be viewed at the company's website.
In light of the current COVID-19 situation the formal launch event has had to be postponed but details will follow in due course.
Simon Brown, founder and managing director of R&D tax credit specialist ForrestBrown, explains how vital funding for businesses is being overlooked – yet it could be available in just four weeks and need never be paid back.
It barely needs saying that the economy is in crisis. At the start of April, as many as one in five businesses were facing collapse within a month, while 44 per cent say they have just one to three months’ worth of money. The need to find new reserves or additional income has never been more urgent for businesses of all sizes and in all sectors.
The Government is stepping in, with £330bn backing loans from banks. But these have been slow to materialise and there have been a number of challenges along the way. Things have improved after a crackdown from the chancellor, but the loans will still need repaying at some point. Those businesses taking on debt now may be stifled by it when the recovery comes.
However, there is another way. Research and development (R&D) tax credits are a Government incentive designed to reward UK companies for investing in innovation – something we’re seeing a lot of in the battle against coronavirus.
They’re nothing new, having been launched back in 2000. On average, SMEs get about £53,714 per claim based on 2017/18 figures. However, even smaller companies can receive much bigger claims – millions of pounds in some cases. This amount of money could help enterprises remain solvent so they can live to grow.
It may sound mercenary to be looking for “free cash” at a time of crisis, but that would be a misunderstanding of how the credits work. R&D tax credits are a reward for businesses that have already invested in staff, materials and other project overheads. In fact, HMRC itself has found that for every £1 of tax foregone, up to £2.35 of additional R&D is stimulated. Perhaps every £1 invested in saving innovative businesses across the country could save £billions in lost tax revenue, unemployment payments and sluggish growth after the crisis.
Research and development (R&D) tax credits are a Government incentive designed to reward UK companies for investing in innovation – something we’re seeing a lot of in the battle against coronavirus.
One shrewd business using R&D tax credits to help plug the funding gaps and get through this challenging time is our new main contracting client MY Construction.
On 27 March, just five days before their tax year-end, we had a first call where our R&D process was outlined and engagement letter was sent. They were soon approving the submission we had prepared for the year ended 31 March 2018. The amount? Hundreds of thousands coming back into the business when they needed it most.
That’s the transformative potential of this incentive done properly. However, demand is high and the pressure facing the HMRC to process applications is extraordinary. With this in mind, it’s worth getting the claim right first time. With businesses hanging in the balance, there’s no margin for error.
A claim starts with the gathering of all the appropriate information – usually data such as payroll and accounts. Next comes the identification of qualifying activities and costs, a foot wrong at this stage can cause problems down the line. To be sure, firms really need a specialist so they neither over – nor under claim.
From these identified qualifying activities, a benefit figure can be calculated. But to be accurate, it needs to decisively navigate a host of business-specific complicating factors – like grants and subcontracting arrangements.
Overall it must have a robust methodology behind it. This should include a technical narrative, a summary of costs incurred and how the claim has been calculated. The next step is submitting the report in the way HMRC wants to see it. It’s vital to update the Corporation Tax return amended to include the R&D tax credit calculation.
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Even if a business is in hibernation mode right now, it is possible to undertake a claim by collaborating with a specialist to do the legwork for them. But the biggest mistake would be to rush it. There’s been talk of businesses attempting to undertake the claim in 24 hours. This is a recipe for disaster and a sure way of inviting an enquiry into a poor claim that could cost a business dearly when they can least afford it.
However, it can be achieved quickly – if not overnight – with the right approach. Even in lockdown. Many businesses have resorted to home and remote working, and this should be harnessed to ensure the appropriate people are included in the claim process.
In summary, it’s important not to underestimate the value of R&D tax credits done properly. In challenging times, businesses need every bit of help they can get. That means not leaving a penny of the value you’ve earned unclaimed.
The global COVID-19 crisis has triggered the most disruptive period to British society in peacetime history. The impact on the public and our healthcare system has been devastating, and our economy is facing the prospect of a recession much deeper and more painful than the economic crash of 2008.
However, this must be seen differently to 2008; a time where a culture of risk-taking by banks and from within the financial services industry left consumers and businesses reeling as credit lines were pulled. Back then the ‘casino culture’, which was so widespread in the city, was seen as the root cause of the crash, triggering substantial unemployment and misery for millions.
Now, we are all in it together, with the coronavirus hitting start-ups, small traders, shopkeepers and global businesses without discrimination. Companies are already collapsing into administration, with millions of workers furloughed on 80% salaries, and having to be supported by government finance and emergency loans. Wayne Johnson, CEO of Encompass Corporation explains to Finance Monthly why now is the time for banks to prove themselves.
Let us be quite clear - businesses and the general public need banks more than ever in this challenging time. It is certainly true that many of the major providers have already stepped up and emergency banking proposals have already been enacted to help businesses and individuals in these trying times. The Bank of England, for example, has already cut interest rates on their loans to 0.1%, and are working with HM Treasury to support large businesses by offering cash for their corporate debt. Elsewhere, many major consumer banks are offering mortgage, credit card and overdraft payment holidays for up to three months.
However, there is still a gulf of trust between businesses and banks, with many organisations still feeling that financial services firms do not always have their best interests at heart.
Today, the banks are in a much better position, with deeper capital buffers and better regulation. Thus, major financial service providers are in a unique position whereby they can potentially regain the trust of the British public with a strong stance, deep pockets, and generous investment in struggling businesses.
Let us be quite clear - businesses and the general public need banks more than ever in this challenging time.
Moving forward, banks should continue their dedication towards their customers and British business in general through swift action and financial support that proves ongoing, selfless commitment to the economy and its people.
This concerted effort requires adaptation from the financial services industry. The increased dependency on loans and support will inevitably have an overwhelming impact on the skeleton crew of bankers, who are themselves having to deal with the transition to remote working and unprecedented economic climate brought upon us by COVID-19.
Fortunately, there is an abundance of automation and regulatory technology (RegTech) at the banking sectors’ disposal. Recommendations from the Financial Action Task Force (FATF) and updated legislation from the Fifth Money Laundering Directive (5MLD), for example, has increasingly pushed banks towards using automation in recent years. While it is no secret that client onboarding and background checks are greatly improved with the assistance of the right RegTech, many financial services organisations can be somewhat hesitant when it comes to introducing new technology to their centuries old trade.
This has to change now. Automated customer onboarding is effective, efficient and empowers analysts at a time when human interaction is, in many cases, no longer an option during this unprecedented time.
Furthermore, the efficiency of proven RegTech software can ensure financial institutions are in a position to comfortably manage, and even accelerate, payment processes – a particularly useful function for SMEs, organisations and individuals at a time when they need access to finances and payment processes more than ever.
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Additionally, in today’s landscape, where consumers have come to expect instant services in all sectors of customer experience, automation is all the more crucial. Statistics from recent research that we published found that 38% of UK businesses have deliberately abandoned an application for banking services due to ‘slow due diligence processes’. Furthermore, nearly one third of businesses said they now trust challenger banking brands and fintech providers - known for their slick and fast digital onboarding - more than traditional banks.
COVID-19 has put consumers in an unprecedented position, as thousands are having to lean on traditional banks, modern fintechs and lenders. Thus, it’s a better time than ever to speed up and smooth out processes, if no less for the purpose of providing the best possible services for those who desperately require it.
Finally, there has been an increased trend in opportunistic cyber criminals looking to profit as a result of the current climate and, more specifically, from the influx of remote workers - many of whom have not been trained with even the most basic fraud detection or cyber security measures. Such criminals have been known to exploit the goodwill of remote workers through fake charities and financial fraud schemes, before laundering stolen money through overworked and under resourced financial services.
With the right technology in place, financial institutions can reduce the strain on their employees and resources, and flag criminal or suspicious activity at a rate never before possible. This will help combat the wave of online financial crime facing workers and businesses in lockdown, and ensure that accountants and banking services are not unknowingly contributing to money laundering during the crisis, which is set to afflict the nation for the foreseeable future.
Virgin Australia confirmed on Tuesday that it has entered voluntary administration, putting 15,000 jobs at risk.
In a statement, the company pledged to continue its scheduled flights that are “helping to transport essential workers, maintain important freight corridors, and transport Australians home.” Travel credits will also remain valid, the statement continued.
The airline’s board of directors has appointed Deloitte’s Vaughan Strawbridge, Sal Algeri, John Greig and Richard Hughes as voluntary administrators.
With 80% of its workforce already stood down, Strawbridge said that there were “no plans to make any redundancies.”
Virgin Australia’s slump marks the first major airline in the Australasia region to enter administration as a result of the COVID-19 pandemic and the ensuing quarantine measures across many countries.
The news has come only days after Virgin Group founder Sir Richard Branson published an open letter to Virgin’s 70,000 employees in which he warned of the consequences of the airline’s potential collapse.
“If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies,” the tycoon wrote. “We all know what that would lead to.”
Despite its requests to the Australian government, Virgin Australia was not issued the $1.4 billion emergency loan that it sought.
Virgin Australia’s difficulties mirror those faced by other major airlines around the globe, which are struggling to cope with increased travel restrictions and a dramatic fall in demand amid the COVID-19 crisis. UK-based airline Flybe also went into administration early in March as the pandemic exacerbated its existing financial concerns.
During Monday trading, price of West Texas Intermediate (WTI) crude oil fell from $18 to -$38 per barrel, the first time in history that the US oil benchmark has fallen into negative territory, resulting in cases where buyers were paid to accept oil.
Stewart Gickman, an analyst at CFRA Research, described the price shock as “off-the-charts wacky”, having “overwhelmed anything that people could have expected.”
The unprecedented price drop comes as a consequence of the system of purchasing oil through futures contracts and how they work. WTI futures contracts, which require buyers to take possession of oil in May, were set to expire on Tuesday, resulting in a mass sell-off due to a lack of available space to store the oil once it is shipped.
Now that this deadline has arrived, WTI crude prices have seen the beginnings of a recovery, though they have not yet reached $0.
International prices have also slipped, with Brent crude falling more than 20% to less than $20 a barrel on Tuesday morning. The global supply disruption caused by the COVID-19 crisis has resulted in an extreme fall in demand that is likely to persist throughout April.
The impact of the coronavirus pandemic has also coincided with an oil price war between Saudi Arabia and Russia that saw both sides pledging to increase oil production to historically high levels. Though this price war has since ended, the increased supply undoubtedly contributed to the current glut.
Aaron Brady, vice president for energy oil market services at IHS Markit, described the problem to the New York Times. “If you are a producer, your market has disappeared and if you don’t have access to storage you are out of luck,” he explained. “The system is seizing up.”
With lockdown measures expected to continue for at least another three weeks, a significant number of businesses will face further disruption, as they try to balance reduced revenue with maintaining the same level of service delivery.
A key area of concern for many business owners is how their business insurance will be impacted and what changes they need to consider now employees are working from home.
Review your Employer’s Liability Insurance
Employer’s Liability Insurance protects businesses in the event that they are sued by an employee or ex-employee for a work-related illness or injury.
With employees now working remotely, it is advisable for business owners to contact their insurance provider to check that their policy extends to working from home. If it doesn’t, you should have the option to extend your policy to ensure it covers remote working, for which you should request a copy of the policy terms.
Whilst it is important to ensure you have adequate Employer’s Liability Insurance in place, it should be noted that it is the responsibility of the employee to look after themselves and ensure their home environment is safe.
However, negligence claims could be raised if certain tools were provided for an employee to use in their home environment without the right health and safety equipment. In this scenario, it is important to run through full health and safety procedures and ascertain as to whether the completion of the work is fundamental or if it is safer for operations to be placed on hold until you can resume work in your day-to-day working environment.
Overall, it is unlikely that courts would rule against the employer if a staff member had an accident when working from home, due to the difficulties all businesses currently face in trying to protect their staff and maintain operations amidst the COVID-19 pandemic.
Whilst it is important to ensure you have adequate Employer’s Liability Insurance in place, it should be noted that it is the responsibility of the employee to look after themselves and ensure their home environment is safe.
Business Interruption Claims
Business Interruption Insurance covers the financial losses that result from a direct consequence of business interruption, such as loss of revenue.
If you have business interruption insurance and your business cannot operate due to the impact of the coronavirus, it is worth contacting your insurance provider to see if you can make a claim.
While it is likely that the majority of business insurers will have now clarified their policies and imposed exclusions relating to COVID-19, this won’t have been included in your original policy.
Review the policy terms to see if ‘notifiable diseases’ are covered as part of your business interruption policy, as opposed to a list of specific diseases, together with a clause stating the business must be closed by a competent authority to be covered under the scheme.
In these circumstances, you may be able to commence the claims process and recover your lost revenue.
Increased Cyber Risks
With the majority of employers now working from home, there is an increased cybersecurity and data risk.
For example, there has already been a steep rise in coronavirus phishing emails, with thousands falling for the scam. With workers working remotely, this is likely to continue, and it is, therefore, advisable for business owners to review their existing cybersecurity policies.
If you haven’t yet invested in Cyber Security Insurance, now might be a good time to assess its value. However, with insurance providers constantly updating their policies to coincide with the disruption caused by COVID-19, it is important to review all aspects of the policy before you purchase it.
Ultimately, COVID-19 has caused a period of unprecedented disruption for millions of businesses across the UK. To avoid further disruption, it is advisable to review all of your existing insurance policies to ensure your business remains as protected as possible both in the short and long-term.
Official figures released by China on Friday have shown a decrease of 6.8% in the country’s GDP between January and March.
This marks the first economic contraction that China has experienced since Beijing started releasing quarterly GDP figures in 1992. Some observers estimate that this is the country’s first period of negative growth in over four decades, pointing to the downturn of 1976 that marked the end of the Cultural Revolution.
The fall has been predicted for some time, though the figures released have been more dire than most expected; analysts at Reuter’s predicted a decline of only 6.5%.
Other data released painted an equally negative picture. Retail sales, fixed asset investment and industrial output have all seen significant declines.
These changes are an effect of the COVID-19 epidemic, which originated in the Chinese city of Wuhan. While China announced on April 6th that it had it had experienced no new coronavirus deaths for a full day, it has since revised the number of recorded deaths upwards by 50%.
China is now taking steps towards restarting its economy, ending quarantine measures and reopening its factories. However, the global fall in demand for its goods is unlikely to see a reversal so quickly.
The contraction in China’s economy is also likely to have an impact across the rest of Asia as Chinese stimulus spending is reduced.
The International Monetary Fund has warned that the world economy faces a recession that could be as damaging as the Great Depression of the 1930s.
The COVID-19 pandemic has rendered daily life unrecognisable, and across the globe people are trying to determine how to navigate the strange new world we are living in. At the same time, businesses are having to alter their practices to keep functioning despite the changes that the rapid spread of COVID-19 has caused. The pressure is being felt across all sectors and financial services are no exception.
However, despite the uncertainty of the current environment, regulators still require businesses to comply with certain standards - as made clear in the recent information published by the FCA, which lays out the expectations of the regulator over the coming weeks and months.
With this in mind, there are steps financial services businesses can take to stay on the right side of the FCA during these unprecedented times. Imogen Makin, Director at DWF, outlines the most important ones to consider.
There will undoubtedly be some teething problems for businesses as their workforces get used to the mass remote working required to comply with the current isolation rules. The FCA, and other regulators, know that this situation has never occurred before, and are therefore understanding of any problems or issues encountered in transitioning to this new way of working. However, the key here is just that, that these problems should be identified and reasonable steps taken to rectify them sooner rather than later.
Financial businesses must make it a priority to deal with any problems efficiently and effectively to minimise the risk of criticism from the FCA. Enforcement outcomes over the last few years suggest that firms' response times, both in terms of the identification and rectification of any problems, are important.
Another key issue linked to business being done from home is potential market abuse. Firms’ systems and controls for the prevention and detection of market abuse has been an area of focus for the FCA for some time, and the risks around mass remote working have brought this back to the forefront of the FCA's agenda. The FCA has stated that firms could consider whether they need to introduce enhanced monitoring, for example, in order to mitigate market abuse risks.
It is clear from the FCA Primary Market Bulletin published on 17 March 2020 that the regulator expects firms to continue to comply with their obligations under the Market Abuse Regulation and relevant FCA rules, notwithstanding the operational difficulties they may be facing. Firms therefore need to ensure that their analysis of market abuse risks in this new working environment is clearly documented, alongside any actions taken to mitigate them.
The FCA has stated that firms could consider whether they need to introduce enhanced monitoring [...] in order to mitigate market abuse risks.
Further to the new rules brought in by the government to only travel when it is essential, the FCA published a statement outlining the responsibilities of Senior Managers to determine which employees must continue to travel to work.
Senior Managers responsible for identifying which of their employees need to travel to the office or business continuity site should document clearly the rationale for requiring any work-related travel and ensure that this is kept to a minimum in order to both appease the FCA, and keep their workforce as safe as possible.
The disruption caused by the COVID-19 pandemic is unchartered territory; it has affected education, work, and almost all aspects of everyday life.
With this in mind, it is important for financial services businesses to consider that their customers are likely experiencing many stresses and uncertainties themselves and so regulators, including the FCA, have made it clear that they expect customers to be given flexibility and leniency, for example, in relation to mortgage payments.
Firms will need to ensure that they strike the right balance between protecting consumers' interests, whilst also maintaining their own liquidity and financial resilience, all of which are important in the eyes of the FCA.
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As in all successful relationships, communication is key - and the relationship between firms and regulators is no different. The FCA accepts that businesses are doing all they can to keep functioning during these extraordinary times, but they are nevertheless still required to comply with their Principle 11 obligations.
Firms should make sure they maintain an open dialogue with the FCA and inform them of problems sooner rather than later; for example if a firm is unable to meet FCA requirements in relation to recorded lines, the FCA has stated that it expects to be notified. The FCA's publications in relation to COVID-19 suggest that the regulator is prepared to be forgiving as long as firms have kept them informed and have taken reasonable steps to deal with any challenges that arise.
Firms regulated by the FCA do not need to fear - everyone is getting to grips with the new working environment simultaneously and some initial challenges are inevitable. The FCA has demonstrated that it is willing to be reasonable, but it will not allow COVID-19 to be used as an excuse for bad behaviour. The points outlined above provide a few tips to FS businesses to maintain good relations with the FCA for when the world returns to normal (whenever that may be).
