Financial statements - responses to Chapter 3 of CP17/16

Policy Statement 36/16

Published on 12 December 2016

Update: On Friday 15 September, the PRA published UK-specific reporting clarifications for FINREP Financial Statements templates. The clarifications are intended to help firms in complying with the financial statements reporting requirements, as set out in paragraph 2.9 of PS36/16. See the CRD firms - Reporting Requirements webpage for more information.

Update: On Thursday 25 May 2017 the PRA updated the PRA105 'Balance sheet - forecast data (Liabilities)' template to correct an administrative error that resulted in the omission of row 300 (Total Liabilities) from PRA105b when published in PS36/16 on 12 December 2016. The updated template is available on the CRD firms - Reporting Requirements webpage.

Overview

This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback on responses to the financial statements (balance sheet and statement of profit or loss (P&L)) proposals in Chapter 3 (paragraphs 3.1-3.18) of Consultation Paper (CP) 17/16 ‘Regulatory reporting of financial statements, forecast capital data and IFRS 9 requirements’. This PS also includes the final rules for the new reporting requirements relating to balance sheet and P&L data in the Regulatory Reporting Part of the PRA Rulebook (Appendix 1), an update to Supervisory Statement (SS) 34/15, ‘Guidelines for completing regulatory reports’ (Appendix 2) and new returns and instructions (Appendices 3-5).

This PS is relevant to PRA-authorised banks, non-European Economic Area (non-EEA) banks authorised to accept deposits through a branch in the United Kingdom, building societies and designated investment firms.

CP17/16 also consulted on changes to PRA rules and SS34/15 relating to the regulatory reporting of forecast capital data, and included a discussion chapter on reporting of International Financial Reporting Standard 9 (IFRS 9). Feedback and final rules relating to forecast capital data were published on 16 November in PS32/16. A consultation paper on the proposals relating to IFRS 9 has been published alongside this PS.

The policy has been designed in the context of the current UK and EU regulatory framework. The PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework, including those arising once any new arrangements with the European Union take effect.

Feedback on consultation responses

The PRA received ten responses to the CP. Overall the PRA does not consider that the responses received to CP17/16 necessitate significant changes to the proposals. The feedback to responses are outlined in Chapter 2.

The changes made to SS34/15 also incorporate minor amendments to the list of appendices as a result of CP26/16 ‘Occasional Consultation Paper’. Feedback and final rules for CP26/16 have been published in PS35/16, ‘Response to CP26/16’.

Implementation

Some respondents requested that the PRA delay implementation of the proposals until 2019 to allow firms more time to prepare, as there are a number of other significant banking reforms in progress. The PRA maintains that an implementation date of 1 January 2018 for the new format balance sheet and P&L is necessary, to align with the introduction of the new accounting standard (IFRS 9) for accounting years commencing on or after this date, as the FSA001 and FSA002 currently reported are not compatible with IFRS 9.

Firms that do not have an accounting year end of 31 December 2017 will be able to apply for a rule modification (via the modification by consent process) which would enable them to delay application of the new rules and new format reporting until the start of their financial year beginning in 2018. The application form for the rule modification is available on the ‘Waivers and modifications by consent’ webpage.

The CP proposed that the balance sheet, P&L and Statement of Comprehensive Income (SOCI) FINREP data templates and PRA104-PRA107 would be scheduled on a calendar quarter reporting basis. Firms that do not have an accounting year end of 31 December and wish to report on a schedule linked to their accounting reference date (ARD) can notify the PRA via a form on the ‘CRD firms’ webpage.

As set out in the PS (paragraph 1.5), the PRA will publish details of the systems which will be used by firms to report the new returns by Tuesday 28 February 2017 on the ‘CRD firms - Reporting Requirements’ webpage. The data items in Appendices 3-5 are for information only, to give firms early sight of the information that will be required for returns effective from 1 January 2018.

Policy Statement 36/16