CEBS publishes a Feedback document on its consultation paper on amendments to the guidelines on Financial Reporting
21 October 2009
CEBS publishes today its feedback paper on the consultation paper (CP06rev2) regarding amendments to the FINREP guidelines. The consultation period last for three months and ended on the 10 June 2009. 15 public responses were received all of which were published on the CEBS website.
In addition to soliciting written comments, CEBS provided an opportunity for industry participants to provide further input at a public hearing with CEBS experts on FINREP, arranged on 27 May 2009.
This feedback paper presents a summary of the key points arising from the consultation, the analysis and discussion triggered by these comments and the actions taken to address them if deemed necessary.
The main points by respondents to the consultation paper and CEBS' assessment of it can be summarised as follows:
Maximum data model. Respondents welcome the proposal to adopt explicit minimum and maximum reporting requirements based on uniform definitions which would reduce the current level of divergence in requirements. The industry also acknowledges the net reduction of the reporting burden, in terms of quantitative data deleted resulting from the revised package. However respondents stressed that FINREP should be the only consolidated financial reporting for prudential supervision of individual banking groups and ask for a strict commitment from local regulators to apply this rule. To avoid distortion of competition and to improve the supervision of cross border banking groups, they consider that the guidelines have to be applied by all supervisors.
FINREP application. CEBS is aware of the benefits that a wider application of the FINREP framework could provide in terms of level playing field and cross border group's supervision as well as reduction of reporting burden. Nevertheless, making the FINREP reporting mandatory in all Member states is currently out of its mandate. Meanwhile, CEBS guidelines strongly recommend the implementation of FINREP at national level. Furthermore, a strong "comply or explain" clause has been introduced in the guidelines in order to enhance its implementation and give transparent reasoning for its non-application (including use of alternative means by national supervisors to collect financial information). This information will be posted on CEBS website (national supervisory disclosures).
FINREP scope of consolidation. The CRD scope of consolidation shall be applied to all FINREP templates. However for a limited set of FINREP templates national supervisors will be allowed to ask data reported on an IFRS scope including insurance activities. Information that is allowed to be reported with IFRS scope will be consistent with public financial information.
Frequency and remittance dates. Some supervisors use FINREP templates to reconcile financial information with prudential information based on COREP templates. As a result the proposal to limit the maximum frequency to quarterly reporting but keep the option for supervisors to ask for less frequent reporting, as well as retain a corridor of 20 to 40 business days after the reporting date for remittance dates, takes into account the needs of supervisors of having timely accounting information and reflects differences in supervisory practices.
IAS/IFRS amendments. CEBS agrees with most respondents to take into account changes on IAS/IFRSs before starting implementing the revised FINREP framework (in particular, the recent IASB project on IAS 39 replacement and the proposal on IAS 1). These amendments and projects will be taken into account into the revised framework in order to avoid redundant and costly IT system changes. Adequate solutions will be investigated for early adopters of the revised version IAS 39. A dedicated team consisting of accounting and reporting experts will monitor IASB proposals in order to assess the impacts on the FINREP framework.
Implementation deadline. As mentioned by the chairman of CEBS' Expert Group on Financial Information during the Public hearing on 27 May 2009 it will be possible to implement a framework already updated with the revised accounting standards. Hence CEBS will publish a provisional revised FINREP framework in December 2009, which might be reviewed, in due course, to take into account the changes that may arise in IAS 39, as well as IAS 1. CEBS aims at receiving first data based on the final revised FINREP as of 31 March 2012.