Regulatory reporting – PRA fires warning shot

13 November 2019

The PRA has sent a “Dear CEO” letter to firms reminding them of the need to submit complete, timely and accurate regulatory data returns. The PRA highlights that it intends to commission s166 skilled person reviews on firms’ COREP and other related returns. If you haven’t recently reviewed your processes and controls around reporting practices now would be a good time.

Regulatory reporting is a cornerstone of a firm’s interaction with its regulator. Regulators rely on the data you provide to supervise your firm effectively. Regulators also use this data in aggregate with your peers to identify trends in the financial services sector in which you operate. In our experience, if you get this information wrong or incomplete, regulators see this as a symptom of weaknesses in your governance and controls process around regulatory reporting and, when it comes to your SREP review, may ask you to hold more capital to compensate.

In the “Dear CEO” letter, the PRA is clear that they expect firms to demonstrate they have the right processes in place to ensure their regulatory data returns are of appropriate quality. This includes documenting the key interpretations and judgements firms have made and how they have validated these.

Questions to ask yourself about regulatory reporting

  1. When was the last time you took a closer look at the regulatory reporting requirements and how your firm has interpreted them?
  2. Have you documented all the interpretations and judgements you have made in respect of your regulatory data returns documented?
  3. Do you regularly review the governance and controls processes you have in place around regulatory reporting?

Reviewing your regulatory reporting practices – people and process

The PRA expects firms “to take action as necessary to ensure the integrity” of their regulatory data returns.

We recommend you undertake regular reviews of your regulatory reporting practices. Your review should include not just your interpretation of the requirements and whether your processes are sufficiently rigorous and documented, but also whether all the people involved in the production and review of returns have the appropriate knowledge and skills.

We can help with your regulatory returns

We are frequently asked by our clients to review their regulatory data returns, and as a member of the Skilled Persons Panel, we have conducted a s166 review for the PRA.

If you would like to discuss how we can help you be confident that you are getting your returns right, please get in touch.

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