FINREP is a logical starting point for the PRA’s streamlining effort. A significant cut to the number of FINREP templates will be welcomed by firms looking to ease the burden on their already busy regulatory reporting teams.
However, these teams should take care to ensure that financial statement data reported across their CRR and PRA returns is still complete and accurate. KPMG in the UK has seen the regulator cross reference information between return modules, and this practice is likely to continue after the proposed changes. We have conducted regulatory reporting cross validation exercises with firms which have commonly identified significant differences across reporting modules.
We can assist with reviewing and updating interpretations, strengthening processes and controls, and governance reviews, to improve consistency and accuracy across firms’ regulatory returns.
This is an important first step in achieving a more proportionate and risk-based approach to regulatory reporting for banks. The proposals in CP21/25 would deliver an initial set of targeted deletions. Later in the year the PRA intends to publish a Discussion Paper setting out the principles underpinning its approach to reporting “with a view to supporting a series of pragmatic and incremental changes to bank reporting over the coming years”.
Future initiatives may be unlikely to deliver the same level of savings as there is less duplication in other modules such as Own Funds, Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR), and therefore less scope for rationalisation of templates. Capital, liquidity and leverage reporting are critical to the PRA’s oversight of firms, so any changes will need to balance carefully the desire to ease the regulatory burden with maintaining effective supervision.
