February 2021 Regulation Update

UK CRR2

The PRA issued consultation paper CP 5-21 regarding the implementation of the remaining parts of Basel 3.0 (UK CRR2). The regulatory requirements (based on the EBA taxonomy 3.0) will affect reporting in 2022, with the regulation being applicable from 1st January that year. As previously communicated, Whistlebrook will be supporting EBA taxonomy 3.0 from 1st January 2022 only.

As at February 2021, the templates proposed in the PRA paper appear to match the layouts (one exception) of those to be applied under taxonomy 3.0 in the EU. The aforementioned exception refers to the layout of C 90 (Market Risk). Given that difference, it is recommended that reference is made to the publications of the PRA with regard to this taxonomy, going forward.

Of note is the PRA has proposed that C 66.01 (Additional Liquidity Monitoring Metrics Maturity Ladder) be withdrawn in the UK.

The other main changes proposed are understood to be consistent with those published for EU CRR2 and include:

  • New COREP reporting – Counterparty credit risk; Net stable funding ratio; Prudential Backstop
  • Large exposures capital basis to be Tier 1 and not ‘eligible’; exposures that are equal to or greater than GBP 260million are to be reported
  • The UK leverage ratio framework is being reviewed (expected completion in summer 2021) and it is understood that the outcome may affect reporting in COREP
  • Also subject to change are Forecast Capital + and Profit or Loss PRA107
  • Intangibles – All (including software) are to be deducted in full from Common Equity Tier one capital. This treatment reverses the partial deduction introduced in December 2020.
  • Thresholds expressed in Euro will be redenominated to GBP. The exception to that is the €1million limit referred to in remuneration reporting.
  • Disclosure templates have also been proposed

Whistlebrook will make the necessary adjustments to Wires, ahead of the effective date. The source used for the above summary is https://www.bankofengland.co.uk/prudential-regulation/publication/2021/february/implementation-of-basel-standards.

FIN A Annual Reports and Accounts

For PRA regulated firms that have a normal submission deadline of up to and including 31 July 2021, FIN A will be accepted with a delay of two months. The PRA statement that communicated this acceptable delay (in light of the effects of the pandemic) also made reference to the point that for Building Societies, there may be other requirements to consider that will affect the flexibility.

Buy Now Pay Later Unsecured Credit

A recent paper published by the FCA included a recommendation that ‘buy now pay later’ credit be subject to regulation. That regulation will mean introduction of affordability assessments before loans are provided.

OSCA Replacement

The Bank of England’s BEEDS system will be replacing OSCA. It is understood that some firms will be ‘on-boarded’ for their reporting in September. By January 2022, it is expected that all firms will be submitting to BEEDS. These dates are those shared by the Bank of England. Whistlebrook will make the necessary changes to Wires to accommodate the replacement of OSCA.

GABRIEL Replacement

The FCA collection system, Gabriel, is to be replaced by RegData. Firms will be advised (by the regulator) three weeks before the time that they are to be moved over to the new system. For Wires users, direct submission will not change. Therefore clients will be unaffected. Only the portal is changing.