EBA initiated a study on the institutions' cost of compliance with the supervisory reporting requirements. As part of the study, EBA launched a questionnaire addressed to all European banks. It also called for case studies to collect evidence on reporting costs and for industry views on ways to reduce such costs and make the supervisory reporting more efficient. EBA expects the responses to the questionnaires and the call for case studies in October 2020. EBA also published an explanatory note and documents on introduction to this exercise and the questionnaire. The cost of compliance study focuses on understanding the costs incurred by institutions in relation to supervisory reporting and in relation to the EBA implementing technical standards on supervisory reporting. The findings from this analysis should be formulated in a report and delivered to the EC and the European Parliament in 2021.
Under the Capital Requirements Regulation, EBA is mandated to measure the costs institutions incur when complying with the reporting requirements set out in its technical standards on supervisory reporting. EBA is also asked to assess whether these reporting costs are proportionate with regard to the benefits delivered for prudential supervision and make recommendations on how to reduce the reporting cost at least for small and non-complex institutions. To fulfill its mandate for this study, EBA will organize the analytical work based on four components:
- A questionnaire to institutions—EBA aims to collect quantitative and qualitative information on the historical reporting costs and benefits of reporting as well as the evidence-based views on the possible changes to reporting requirements or processes, with the aim of reducing costs and increasing efficiencies. The questionnaire aims to understand the reporting costs, the cost drivers, and the benefits and to identify the reporting challenges. It also looks into the effectiveness of proportionality measures that have been put in place in the past, along with the first ideas on how to make reporting even more efficient and proportionate in the future. This questionnaire aims to collect information about the cost of compliance with reporting requirements on an institution-by-institution level. The answers to the (voluntary) questionnaire should be provided by credit institutions or by relevant third parties on behalf of institutions with an institution-specific focus and institution-specific data in principle.
- A questionnaire to the users of reporting—A second questionnaire aims to gather understanding of the benefits of standardized supervisory reporting for its various users. The primary addressees of this survey are supervisory authorities across Europe and other potential users of such regulatory reporting. This questionnaire is still being developed and supervisory part of the study will be launched later. The survey on supervisors is expected to be conducted between September 2020 and October 2020.
- Interviews with selected industry associations and institutions—Based on the results of the questionnaire to institutions, EBA is planning to organize a limited number of focused interviews with a sample of institutions across Europe to gather further understanding of the sources of cost and the potential measures to reduce them. Interviews with selected institutions and associations are expected to be conducted between late September 2020 and October 2020.
- Case studies—The fourth component of the methodology is fact-finding case studies. EBA encourages interested stakeholders, including individual institutions, associations, software providers, and academics to conduct their own quantitative evidence-based case studies on either reporting costs or the benefits of certain cost-reduction measures or options, or both, and share their results with EBA.
Following the discussions with various EU-level and national industry trade bodies, EBA has split the questionnaire for institutions into two parts (qualitative and quantitative) with different deadlines for responses, to take due account of the priorities and challenges faced by institutions in the current COVID-19 environment. Responses to the qualitative questions are expected by October 01, 2020, while responses to the quantitative questions as well as the submission of case studies are expected by October 31, 2020.
- Press Release
- Explanatory Note (PDF)
- Questionnaire to Institutions (PDF)
- Case Studies Note (PDF)
- Overview of Cost of Compliance Study
Keywords: Europe, EU, Banking, COVID-19, Reporting, CRR, Basel, Cost of Compliance, Proportionality, EBA
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