Published on 6 July 2016
IFRS 9: Changes to reporting requirements – PS18/17
This Prudential Regulation Authority (PRA) policy statement (PS) provides feedback to responses to Consultation Paper (CP) 46/16 ‘IFRS 9: changes to reporting requirements’ (‘the CP’).
It sets out final rules intended to update regulatory reporting requirements, and expectations, in light of the introduction of International Financial Reporting Standard 9 (IFRS 9) from 1 January 2018.
This PS is relevant to UK banks and building societies. It is not relevant to PRA-designated UK investment firms, to UK branches of firms in other European Economic Area (EEA) countries and non-EEA countries, or to insurance firms. It should be read alongside the Regulatory Reporting Part of the PRA Rulebook.
This PS contains the final amendments to the Regulatory Reporting Part of the PRA Rulebook (Appendix 1) and final amendments to Supervisory Statement (SS) 34/15 ‘Guidelines for completing regulatory reports’ (Appendix 2), which implements the proposals consulted on in the CP.
Feedback on consultation responses
The PRA received seven responses to the CP. Respondents were generally supportive of the proposals but did raise a number of specific issues and questions regarding the details of the templates. The responses are discussed in this PS by the following topics: granularity of reporting templates; implementation timeline; and reporting on an individual or consolidated basis. Following consideration of respondents’ comments, the PRA has made one material change to the rules as consulted on. The PRA has also made a minor change to take account of firms that are implementing IFRS 9 in advance of 1 January 2018. Responses are set out in Chapter 2.
Implementation
The amendments to the Regulatory Reporting Part of the PRA Rulebook and updates to SS34/15 set out in this PS will take effect from 1 January 2018. As set out in CP46/16, firms are required to submit their templates 30 business days after the end of their first reporting period. Firms should use the European Banking Authority (EBA) taxonomy (initially version 2.7) to report their templates and submit their required templates in XBRL format via the Gabriel system. Firms should adhere to the EBA filing rules and the validation rules that apply to the subset of templates required. The taxonomy packages, filing rules and validation rules are available on the EBA website.
Further details on the implementation timeline are available in Chapter 2, including details on rule modifications and notifications available for firms that do not have an accounting year end of 31 December, and UK banks that plan to implement IFRS 9 in advance of 1 January 2018, specifically:
- a modification by consent process: to delay application of the new rules and new format reporting until the start of firms’ financial year beginning in 2018; or to bring forward implementation of the requirements to the start of firms’ financial year in 2017; and
- notification to the PRA to report on a schedule linked to firms’ Accounting Reference Date.
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.
Policy Statement 18/17Appendices
Published on 12 December 2016
IFRS 9: changes to reporting requirements – CP46/16
This consultation paper (CP) sets out the Prudential Regulation Authority’s (PRA’s) proposed changes to regulatory reporting requirements arising from the introduction of International Financial Reporting Standard 9 (IFRS 9) from 1 January 2018. The proposals affect firms’ existing reporting requirements for credit quality, including arrears and impairments.
This CP is relevant to UK banks and building societies. It is not relevant to PRA-designated UK investment firms, to UK branches of firms in other European Economic Area (EEA) countries and non-EEA countries, or to insurance firms. It should be read alongside the Regulatory Reporting Part of the PRA Rulebook and Supervisory Statement (SS) 34/15.
Summary of proposals
The PRA proposes changes to reporting requirements for banks and building societies applying IFRS 9. This would include both firms that apply IFRS in its endorsed form, and those that apply IFRS 9 as part of UK generally accepted accounting practice (GAAP). More specifically, such firms would be required to report certain European Banking Authority (EBA) Financial Reporting (FINREP) templates instead of the current FSA015 (‘Sectoral information, including arrears and impairment’) return, on both an individual and consolidated basis.
The PRA also proposes that certain firms that do not apply IFRS 9 should also report a small number of FINREP templates, to ensure that there is sufficient data available for peer analysis after the implementation of IFRS 9.
Implementation
The proposed implementation date for the proposals in this CP is the start of a firm’s accounting year beginning on or after 1 January 2018, to coincide with the implementation date of IFRS 9. The PRA proposes that firms could apply for a rule modification (via a modification by consent process) which would enable them to delay application of the new rules until the start of their financial year beginning in 2018. The PRA also proposes that firms would be able to apply to report on a schedule linked to their accounting year, rather than report on calendar quarters. This aligns with the approach taken to reporting of financial statements returns set out in Policy Statement (PS) 36/16 ‘Financial statements – responses to Chapter 3 of CP17/16’.
The PRA is considering various collection mechanisms such as an automated submission mechanism, an online portal or reusing existing systems, and is aiming (as far as possible) for the submission mechanism required for these returns to be consistent with the mechanisms that will be used to collect the financial statement returns set out in PS36/16. The PRA will publish details of the submission method which will be used by firms to report these returns on the PRA webpages in early 2017.
Responses and next steps
This consultation closed on Monday 13 March 2017.