Herbert Smith Freehills EMEA disputes head and the firm's global head of financial services regulatory practice Jenny Stainsby offers her thoughts on what regulatory requirements clients and firms will have to think about, after a tumultuous period including Brexit and the COVID-19 levels.

At the beginning of the year, for U.K. companies and their lawyers, 2020 inevitably involved Brexit preparedness. Having spent significant time, money and energy during 2019 making preparations for a potential no-deal scenario, many felt that, while still a significant priority for the year, it was a challenge that was relatively under control, albeit most acknowledged that there remained some aspects of Brexit which would remain (on the Rumsfeld continuum) as 'unknown unknowns'.

By March, as the scale of the COVID-19 pandemic started to become clear, Brexit was no longer dominating the news cycle. What the U.K., and the world, was facing was whole new level of crisis.

Nothing has been immune from the impact of this pandemic. Companies faced challenges on all fronts – not least in relation to liquidity, supply chains and employment matters.

Lawyers, internal and external, have been instrumental in assisting companies navigate the regulatory requirements of the emerging landscape – implementing the swathe of government initiatives and identifying and mitigating risks of the new ways of working.

First, there are practical steps of preparing for re-opening of businesses' premises which have been closed.  This involves preparing a risk assessment which has, at its heart, health and safety concerns but also depends on effective navigation of employment and data laws and regulations in both the 'here and now' and in the context of future risk.

Any change in systems and processes involves a degree of operational risk.  This will have been exacerbated by the unprecedented nature and speed of many of the changes that were required at the outset of lockdown. It will be important to consider what areas would benefit from compliance 'look back' reviews to pre-empt regulatory scrutiny and mitigate potential litigation risk.

Some of the initiatives that have been implemented at speed will, at some point, need to be unwound. For example, the various payment holiday schemes available to retail banking and mortgage customers.  Operational risk is as relevant to the unwinding of such schemes as their setting up.  And, perhaps particularly in the case of financial services firms, there will be the challenge of managing customer needs and perceptions against commercial realities.

Financial services firms are used to managing a fairly constant stream, often a torrent, of regulatory change.  While many of the change projects that were in scope for this year have been delayed, they have not gone away. Firms are very aware that when it comes to looking at risk, change management is already high on regulators' lists.

By way of example, responses to a significant consultation by the PRA and FCA on operational resilience (an area that is clearly being tested in practice right now), and to proposals to improve climate change related financial disclosures by listed issuers are now due on 1 October, and a host of other planned publications have been delayed indefinitely.

But notably, there is no change to the timetable for the transition from Libor. The assumption remains that firms cannot rely on Libor being published after the end of 2021 and therefore the need to transition from Libor within this timeframe also remains.

The financial services regulators recognise that the extension of a number of consultation periods to the start of October could lead to the finalisation of a substantial volume of policy around the end of the year.  This in turn coincides with the end of the EU withdrawal transition period. As things stand, the risk of a no-deal scenario has not gone away

This is a pertinent reminder that the challenges we planned for in 2020 will still exist when this current crisis abates and we resume business as usual, in whatever form that might take.  Being ready is key.

Jenny Stainsby is head of contentious financial services regulatory and regional head of disputes for EMEA at Herbert Smith Freehills

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