March 20, 2020

Effects of COVID-19 Felt Across Financial Services Sector

3 min

The effect of the COVID-19 pandemic is being felt across the financial services sector.  Regulatory agencies, financial institutions, service providers, and consumers have been impacted.  With staff and employees of government agencies and private sector companies increasingly working remotely, impacts to consumer employment and income, and many other consequences of the pandemic emerging, industry participants face a host of compliance issues and regulatory/legal risks.

  • Regulatory agencies are adjusting to mass remote-work, but continue activities, albeit at a somewhat reduced pace.  CFPB announced mandatory telework from its D.C. headquarters and New York offices, and examiners are working remotely through March 26.  The FTC has similarly moved to a telework format and made other procedural changes, but is otherwise maintaining normal operations.  The banking regulators, including the FDIC, OCC, and Federal Reserve have staff working remotely to different degrees, but have moved to remote examinations.
  • Agency rulemaking is showing initial signs of slowing down and comment periods extended as agencies and staff adjust, including for the CFPB’s supplemental proposal regarding the Debt Collection Rule.  However, the FDIC has stated that it does not expect delays in its rulemaking schedule.
  • Institutions with a strong brick-and-mortar presence, such as retail banks and their branches, are limiting hours or are limiting access to drive-through windows.
  • State financial services regulators are issuing guidance to relax some legal requirements and allow regulated employees to work remotely, and the Conference of State Bank Supervisors is tracking these developments.
  • The Federal Reserve Bank of New York released a resource hub with helpful guidance for those impacted by COVID19.
  • Industry participants are addressing the challenges of remote working in a highly-regulated industry.  For example, mortgage lenders are requesting waivers from Fannie Mae, Freddie Mac and the Federal Housing Finance Administration, to allow for verbal income verifications, as well as organizational adjustments to continue to allow for servicing customers’ loans.
  • Banks, credit card companies, fintechs, and other creditors are allowing customers to defer their payments. Financial regulators are encouraging regulated businesses to accommodate consumers.  The FDIC issued guidance encouraging the industry to work with customers to address their needs.

We understand that events are moving rapidly and that it is difficult to find the right information when there is so much noise. Financial institutions and companies working in this space are being asked to step up to meet this extraordinary challenge – while also dealing with the effects of COVID-19.  Events and developments around the COVID-19 pandemic are fluid and rapidly developing.  Therefore, we—financial companies, regulators, communities, and attorneys—must meet this challenge together. While we appreciate that our scope will not be exhaustive, Venable’s Financial Services Practice is continuing to provide coverage and analysis of legal and regulatory topics and guidance, and our team will be sorting through and analyzing regulatory announcements to help industry participants find the answers they need.