How will Andrew Bailey’s letter affect your COREP returns?
Recently published, the FCA’s letter addresses concerns that XBRL data reported to the EBA is inconsistent and often even incorrect. Returns must be of a high quality and valid to ensure that the FCA can properly asses risk, and as of Q4 this year, the authority will be sampling returns to see if there is an increase in data quality.
In Andrew’s letter, the FCA identified 4 common issues with the quality of prudential regulatory returns. With these in mind, here are 4 reminders to keep you on track:
Avoid the blanks
It may sound obvious, but some firms are not submitting the full COREP returns required. All templates must be filled out in line with your specific regulatory reporting requirements.
The EBA’s requirements can change, such as the recent release of COREP 2.7 taxonomy. Do check that any new data requirements are filled in, as these will be left blank when you roll forward to the latest version. For full visibility, you should be able to access your previous returns and earlier versions of the populated template.
Know your modules
You should check your FCA schedule to see what modules you need to submit. It’s possible that as your permissions and business activity changes, you may find yourself complying with different returns. It’s important that you’re aware of all potential modules, and are not just submitting COREP if you’re also required to submit FINREP or Asset Encumbrance.
Assess your quality control
Inconsistency of COREP returns is a key concern for the FCA. Inconsistencies might include incorrect calculations and varying figures for the same category on different templates. The FCA also highlighted concerns with filers reporting using incorrect units.
Make sure your provider has two levels of validation; one to check the consistency of your data, and a second to check the business rules as defined by the XBRL taxonomy. This will ensure that your information is compliant to the FCA and EBA’s requirements, and that the data is valid.
Addressed to the CEO’s of financial institutions reporting the FCA, it’s clear that the regulators are looking for more ownership around returns.
Giving your team responsibility to approve the final submission is a good safeguard. If you can generate an HTML version of your XBRL return, your final sign off can check for these consistencies and leave an audit trail showing approval.
Doubts about your returns process? Don’t wait until October.
The FCA will start checking samples this October, most likely from the Q2 CRD IV returns. If you don’t feel your COREP returns are up scratch under the new guidelines, get in touch with Arkk today.