The Financial Conduct Authority has promised "flexibility" to regulated firms which may struggle financially during the coronavirus pandemic and its associated market fallout.
In an update on its website today (March 26) the regulator said firms are able to use their capital buffers to support their going concern.
But it urged companies which did need to exit the market to do so "in an orderly way while taking steps to reduce the harm to consumers and the markets".
It comes amid weeks of market turmoil as countries closed borders and entered lockdowns in a bid to stop the spread of the coronavirus and curb its death toll.
The FCA said: "Capital and liquidity buffers are there to be used in times of stress. Firms who have been set buffers can use them to support the continuation of the firm’s activities.
"Firms should be planning ahead and ensuring the sound management of their financial resources."
The regulator also pointed to schemes pledged by the government to support businesses and the economy through the downturn, which the FCA said could be part of a firm's plan to meet debts when they fall due.
Earlier this month chancellor Rishi Sunak announced a £330bn war chest of loans to protect businesses against the financial difficulties caused by the coronavirus.
The FCA said firms which would not be able to meet their capital requirements or debts should contact the regulator with a 'plan for the immediate period ahead".
A number of industry voices have called for leniency in regulating the market amid the Covid-19 pandemic, with trade body Pimfa last week asking the financial watchdog to show "regulatory forbearance" during what it branded "extraordinary times".
rachel.mortimer@ft.com
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