May 2020 Regulation Update

EBA Taxonomy 2.9 (FINREP)

Firms subject to FINREP should have any revised requirements being introduced by taxonomy 2.9 on their Gabriel schedule for report reference date 30 June 2020 (depending on the institution’s financial year).

EBA Taxonomy 2.10

The EBA has issued taxonomy 2.10, which will have a phased implementation. The required changes will be included in Wires later in the year. The main contents of the taxonomy are:

  • New reporting – remuneration; market risk; and fraudulent payments
  • Funding plans* – one form is being removed and three added
  • Revised EBA validation rules

*It is understood that funding plans are required from firms that are selected by the Bank of England and collectively make up 75% of UK banking sector’s consolidated assets.

With the exception of market risk, the taxonomy will be effective from report reference 31 December 2020. The two templates being introduced to COREP for market risk, were to commence from 31 March 2021. It has been proposed that the effective date for these be delayed until 30 September 2021.

Further details are in:

https://eba.europa.eu/risk-analysis-and-data/reporting-frameworks/reporting-framework-2.10

Permitted Regulatory Reporting Submission Delays (COVID 19)

In view of the likely increased pressure linked to COVID 19, regulatory submissions normally due by 30 June, are allowed to be made up to one month late.

Whistlebrook understands that the forms to which the delay applies are:

  • Asset Encumbrance
  • COREP (Own Funds, Large Exposures, Leverage, Net Stable Funding)
  • FINREP
  • FSA015 Sectoral Information
  • FSA017 Interest Rate Gap
  • FSA055 Systems and Controls Questionnaire
  • PRA104-108
  • REP005 High Earners report
  • Resolution z templates (excluding liability structure Z 02.00 and 04.00)
  • Ring fenced bank reporting
  • RMA D2 Financial Resources

A delay of two months is allowed for the FIN A return.

No delayed submission is permitted for Liquidity Coverage and Additional Liquidity Monitoring Metrics.

Full details are in:

https://www.fca.org.uk/firms/regulatory-reporting/changes-regulatory-reporting-during-covid-19

https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/publication/2020/regulatory-reporting-covid-19.pdf

Pillar 2A Capital and COVID 19

The PRA advised that SREP in 2020 and 2021 will set Pillar 2A as a nominal value, independent of a firm’s total risk weighted assets (RWAs). If a firm does not have an SREP in 2020, then it can apply to have Pillar 2A (based on RWAs at 31/12/19) converted to a nominal.

EU Withdrawal Post Transition

Transitional relief to firms is being extended to 31 March 2022. It is understood that the regulatory position as at 31 December 2020 will mostly continue until the extended date. Therefore reporting and disclosure requirements will carry on in line with the needs of the EBA as well as those of the PRA and FCA until the end of March 2022.

Use of credit ratings, issued before exit date, provided by EU rating agencies can continue until 31 December 2021 (one year after the end of the transition period). Such a rating agency would need to have been (or in the process of) registered in UK before exit day.

Payment Accounts Regulation Submission

Firms that provide current accounts are required to submit related data covering the period 1 March 2018 to and including 29 February 2020. The data were to be provided by 30 April 2020, but that deadline has been extended until 30 June 2020. Affected firms will have been contacted by the FCA and been given the relevant form to complete.

Review of Mortgage Rates paid by Higher Risk Borrowers

Whistlebrook understands that a letter was sent by the FCA to mortgage lenders (and administrators of closed mortgage books) asking them to review the variable rates being charged. The charges are those made to borrowers that were deemed to be higher risk before the financial crisis of 2008. The purpose of the letter is to ensure that in the presence of the corona virus, the rates seem to be fair. Of particular importance is the need for institutions to support their view in writing. The FCA will follow up on this letter in an attempt to understand the ways in which firms are treating customers fairly.

This information was last updated 22nd May