For a sense of the immediate impact of the health crisis on wealth managers as they meet client and reporting obligations, we spoke to the head of regulation at PIMFA and other groups supporting the sector, and report on fresh guidance from the FCA.

No matter what sector you are in, the coronavirus has crudely divided along essential and non-essential services as banks and the government mobilise a national response. The first bottleneck has been waiting for guidance from the Financial Conduct Authority, as it manages queries from across the regulatory landscape. Wealth managers' concerns may not be top of its priority list.

“What we are telling members is that you are basically going to have to adopt some judgments in reconciling your obligations with the duty of care you owe to your employees and essential workers travelling into firms,” said director of regulation at PIMFA Ian Cornwall in a call this week.

His role at the trade group is primarily engaging with firms, picking up their queries and being “fairly frank” with the regulator. “I have those conversations that the firms would like to have but can’t, and doing it in a sensible way.”

On Wednesday, the FCA delivered some of that much needed clarity to wealth management and financial advice firms.

In a "Dear CEO" letter written to all firms, the watchdog outlined temporary measures that included more flexibility over client identification verification in regard to KYC and AML checks; and more flexibility over “best execution” practices until the end of June. The FCA said it has worked with the European Securities and Markets Authority (ESMA) on clarifying reporting and where leniency will apply. ESMA too updated its guidance late on Tuesday night. As of Wednesday, the FCA also issued flexibility for portfolio managers on sending client depreciation notifications when investments drop by 10 per cent or more, at least until the end of September. (For a separate commentary about this 10 per cent rule, which comes from the MiFID II directive of 2018, see here.)

Other investment initiatives in the works have been paused indefinitely. The full guidance is published here.

PIMFA chief executive Liz Field said that she was “greatly encouraged” by the FCA’s response. “It shows the constructive work that has been carried out by PIMFA on behalf of our members. It also shows the FCA has not only been in ‘listening mode’ but has taken the concerns of our members seriously and has been willing to act and show the regulatory forbearance I have said our members need to continue to serve their customers in these extraordinary times.”

In a crisis environment, legal certainty is a huge issue as governments and regulators grapple with how to act without being in breach of the law; their own and international treaties. Businesses want forbearance that allows them to uphold the rules but still have room to cushion the impact of COVID-19. It is this channel of communication that PIMFA and other organisations have been trying to bridge between regulators and businesses, when all are overstretched.

“What we have told firms is document the judgments you are making and explain why you are doing it, and make sure you have a game plan in place to monitor those judgments, so that as and when more staff become available, you have a process in place to recover that position,” Cornwall said.

Like the virus itself, firms are being hit differently at different times, and in different ways, even in the same city, PIMFA noted. A firm with an administration centre in London is initially being more affected than a firm with one based in Glasgow, for example.