FCA Issues Letter to CEOs on Quality of Prudential Regulatory Returns
FCA published a letter requesting the CEOs of IFPRU investment firms and BIPRU firms to review their regulatory reporting practices. The CEOs are requested to ensure that the regulatory reporting practices are fit for purpose, comply with the relevant reporting provisions, and produce materially accurate data. FCA plans to review a sample of firms’ returns, as of October 01, 2018. If it finds that firms continue to submit materially inaccurate, incomplete, and/or poor quality data, it will then consider the next steps to improve the standards of returns.
FCA uses regulatory returns to assess prudential risk and to understand business models, financial positions, and risk exposures of firms, in addition to identifying trends within and across sectors. In its letter, FCA has identified the most common issues observed with returns, which are:
- Failure to complete the underlying templates within the common reporting framework (COREP) submissions, due to inadequate understanding of the prudential rules
- Failure to submit certain returns, such as the financial reporting return
- Incorrectly calculated total sum of risk exposures across various risk categories (for example, market and credit risks), leading to an inaccurate figure for capital requirements of firms
- Inconsistency in COREP returns—EBA validation rules dictate that certain data points submitted across different templates within COREP should show identical values or equal the sum of a number of other values
- Reporting using incorrect units
- Not reporting cumulatively (on a year-to-date basis) on the FSA002 income statement
Related Link: FCA Letter (PDF)
Keywords: Europe, UK, Securities, Reporting, COREP, Prudential Returns, FCA
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