EBA is conducting a study on the institutions' cost of compliance with supervisory reporting requirements in EU. As part of this project, EBA has published certain documents, including a cover note, a document introducing this exercise, a draft questionnaire, and a draft case studies note for the industry. The cost-of-compliance study aims to understand the overall reporting costs of institutions, including ad hoc supervisory requests. The core objective is to understand the costs and drivers associated with supervisory reporting focused primarily on the EBA supervisory reporting framework, particularly the reporting requirements laid down in EU Regulation No 680/2014—the EBA implementing technical standards on supervisory reporting. The findings from this analysis will be formulated in a report (on the cost-of-compliance study) and delivered to EC.
Under the Capital Requirements Regulation or CRR, EBA is mandated to measure the costs that institutions incur when complying with the supervisory reporting requirements and in particular with those set out in the implementing technical standards on supervisory reporting. EBA is also tasked to assess whether these reporting costs are proportionate compared to the benefits delivered for the purposes of prudential supervision and make recommendations on how to reduce the reporting cost at least for small and non-complex institutions. In the study, EBA will also collect information on costs associated with other supervisory reporting obligations, including the reporting standards set by other international, European, or national bodies as well as "ad hoc requests" from any type of authority. While these reporting obligations are outside the mandate of the study and, therefore, will not be explored prominently or covered by the recommendations, the relative distribution of costs is important. To fulfill its mandate for this study, EBA is planning to organize the analytical work based on four components:
- A questionnaire to institutions—The main source of information for the study will be a questionnaire to credit institutions to collect quantitative and qualitative information from institutions on reporting costs and cost drivers as well as benefits, to identify challenging areas of reporting. The questionnaire also aims at understanding the degree of effectiveness of proportionality measures put in place so far.
- A questionnaire to the users of reporting—A second questionnaire aims to gather a deeper understanding of the benefits of standardized supervisory reporting for various users. This primary addressees of this survey are supervisory authorities across Europe and other potential users of such regulatory reporting.
- 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 a further understanding of the sources of cost and potential measures to reduce them.
- Case studies—The fourth component of the methodology is the 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 benefits of certain cost-reduction measures or options, or both, and share the results with EBA.
The original intention of EBA was to complete the cost of compliance study and deliver the results to EC by the end of 2020. However, this timeline is severely affected by the COVID-19 pandemic because the exercise involves significant interaction with the industry, which is expected to focus on operational priorities in dealing with COVID-19 pandemic response. The timeline will need to be adjusted and finalized, also taking into account feedback from the interaction with the industry that had been planned for May-June 2020. The questionnaire for the reporting institutions and publication of the specifications for the fact-finding case studies will be launched in late June 2020. In September 2020, interviews with selected institutions and associations will take place. September 2020 will also mark as the deadline for submitting fact-finding case studies. The publication date of the report is yet to be confirmed.
The cost of compliance study represents one element in the overall work of EBA on introducing greater proportionality into the regulatory and supervisory frameworks and reducing overall reporting costs for the institutions. EBA is, in this context, also working on a feasibility study on a consistent and integrated system for collecting statistical data, resolution data, and prudential data. Both exercises have visible synergies, especially when looking at the use of reporting solutions and impact on (reducing) reporting costs from the wider use of technology. EBA is planning to capitalize on these synergies when interacting with the institutions, analyzing the results, and making recommendations.
- Cover Note to Cost of Compliance Study (PDF)
- Introduction to Cost of Compliance Exercise (PDF)
- Cost of Compliance Study and Related Documents
Keywords: Europe, EU, Banking, Reporting, COVID-19, CRR, Cost of Compliance, Proportionality, Basel, EBA
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