The PRA Executive Director Victoria Saporta wrote a letter to CFOs of select firms informing them about the good disclosure initiative of the Taskforce on Disclosures about Expected Credit Loss (ECL). This letter was sent to the firms that nominated themselves to participate in the ECL initiative of the Taskforce. PRA encouraged these firms to make as much progress as possible in adopting the recommendations of the Taskforce in their next annual report. PRA will from time to time ask these firms to provide an update on their adoption plans and for a progress report against those plans. PRA expects these firms to be looking to adopt the recommendations of the report in full.
The letter highlighted the importance of good market disclosure about IFRS 9 expected credit loss accounting (ECL) at accounting period-ends. There seems to be a widespread agreement that such disclosures need to be comprehensive, appropriately focused, and at the right level of granularity, in addition to being reliable and noticeably similar from firm to firm. However, there seems to be much less agreement on what those terms mean in practice. Thus, PRA had decided, last year, to ask preparers and market participants to work together (as the Taskforce on Disclosures about Expected Credit Loss) to try to reach a consensus on what good disclosure looks like. PRA, FCA, and the Financial Reporting Council have since been sponsoring the Taskforce’s work. The Taskforce’s first report on recommendations on a comprehensive set of IFRS 9 ECL disclosures was published in November 2018. Although the Taskforce believes all the recommendations could be adopted in full within two or three years, it accepts that not all firms will be able to provide all the disclosures described in full initially. In this letter, PRA includes additional comments on two matters the report specifically mentions as areas on which the Taskforce might develop more detailed recommendations in due course—that is, disclosures for measurement uncertainty and sensitivity and disclosures for the use of Monte Carlo approaches.
Related Link: Letter
Keywords: Europe, UK, Banking, Accounting, ECL, Disclosures, IFRS 9, Taskforce, FCA, FRC, PRA
Previous ArticleECB Report Examines Impact of Integrated Reporting Framework of ESCB
The European Banking Authority (EBA) published the final draft regulatory technical standards on disclosure of investment policy by investment firms, under the Investment Firms Regulation (IFR).
The European Banking Authority (EBA) published version 5.1 of the filing rules for supervisory reporting.
The European Central Bank (ECB) Guideline 2021/1829 on the procedures for the collection of granular credit and credit risk data has been published in the Official Journal of European Union.
The Australian Prudential Regulation Authority (APRA) published the prudential practice guide CPG 511 to assist banks, insurers, and superannuation licensees in meeting requirements of CPS 511, the new prudential standard on remuneration.
The Office of the Comptroller of the Currency (OCC) published a bulletin that provides an updated self-assessment tool for banks to evaluate their preparedness for cessation of the London Interbank Offered Rate (LIBOR).
The Financial Stability Board (FSB) published a report that examines the progress made toward disclosures aligned with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The Basel Committee on Banking Supervision (BCBS) published the progress report on adoption of the Basel III regulatory framework in member jurisdictions.
The French Prudential Supervisory Authority (ACPR) has implemented, in its information system, updates linked to the Data Point Model (DPM) version 3.1.
The European Banking Authority (EBA) published a thematic note that aims to identify and raise awareness of the transition risks of benchmark rates, as the London Interbank Offered Rate (LIBOR) and the Euro Overnight Index Average (EONIA) are close to being phased out.
In a letter to the federally regulated financial institutions and pension plans, the Office of the Superintendent of Financial Institutions (OSFI) published a summary of the feedback received to the January 2021 discussion paper on ways to address climate risks.