Question ID:
Legal Act:
Regulation (EU) No 575/2013 (CRR)
Supervisory reporting - FINREP (incl. FB&NPE)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations:
Not applicable
Disclose name of institution / entity:
Name of institution / submitter:
Building Societies Association
Country of incorporation / residence:
United Kingdom
Type of submitter:
Industry association
Subject Matter:
Scope of application of FINREP

Our question concerns Article 99(4) of Regulation (EU) No. 575/2013 (CRR). Does it empower national competent authorities to determine, in respect of smaller non-systemic institutions that for whatever reason use international accounting standards/ IFRS (and thereby fall under paragraph (2)), that such institutions need not be required to report financial information as envisaged in Article 99 (2)? This would be on the grounds that such information is not necessary either to obtain (i) a comprehensive view of the [individual] risk profile of such institutions; or to obtain (ii) a view of the systemic risks posed by such institutions [collectively] to the financial sector or the real economy.

Background on the question:

This query is being submitted on behalf of UK building societies. UK building societies are mutual organisations, owned by their members, offering straightforward savings and mortgage accounts. A minimum of 75% of their lending must be in residential mortgages. Building society law forbids them to take risk positions in commodities, currencies or derivatives. Their business models are therefore very simple and their members local. With a few exceptions, building societies are not systemic even in domestic, let alone European terms. Ten societies have issued listed capital securities and are therefore required to prepare their financial statements using IFRS. They vary in size; the largest has assets of €226,900 million, the second largest has assets of €39,860 million. The smallest society using IFRS has assets of €928 million. Had they not issued these securities and be forced onto IFRS, the vast majority of these building societies would have remained on the UK national financial reporting framework. They may have one or more relatively minor subsidiaries in the same line of business that together constitute a regulatory consolidated group. With the advent of a new UK IFRS-based financial reporting framework, FRS 102, some non-systemically important institutions with no cross-border activities - a category that includes all building societies - are being advised to move straight to full IFRS. This brings in theory other smaller institutions that are regulatory consolidated groups (currently two) into scope for FINREP. The cost to building societies of installing FINREP systems and the associated review and governance processes is disproportionately high and will have a significant impact on their financial position. We asked our larger affected societies what they estimated the direct implementation costs to be. While these seem low – under 1% of profits – the indirect costs multiplied this figure several times. The effect is greater on smaller societies which do not have the purchasing power of their larger peers or the range of specialist staff to draw on. The data the smaller building societies will provide, on the other hand, will have absolutely no impact on assessing systemic risks to the financial sector or the real economy. And the competent authority has a wide range of other sources of information from which it can form a comprehensive view of the individual institution’s risk profile. Without the possibility of such a determination by the competent authority, some local and regional mutuals that do not pose systemic risks to the financial sector could be caught by the wording in this Article and be required to report using FINREP: global investment banks owned by holding companies, for example, would not be. Mutuals could end up producing financial data that is inconsequential on the European or even national stage but costly to the institutions affected We therefore urge the EBA to clarify the scope for national competent authorities to disapply FINREP in respect of those smaller domestic mutuals such as building societies that otherwise fall under Paragraph 2.

Date of submission:
Published as Final Q&A:
Final Answer:

Institutions that have securities listed on an EU regulated market are mandatory IFRS users and hence must submit FINREP templates on a consolidated basis.

The principle of proportionality mentioned in the level 1 text is implemented in a number of ways for FINREP:

  • Scope of entities ("IFRS institutions" only according to paragraphs (2) and (3) of Article 99 of Regulation (EU) No. 575/2013 (CRR) respectively);
  • Level of information (consolidated level only);
  • Reporting frequencies of the templates (quarterly, semi-annual, annually);
  • Thresholds below which templates do not have to reported (e.g. geographic distributions). 

Furthermore, there is implicit proportionality within the set of FINREP templates because the more restrictive business model of building societies implies that many cells of the templates will not have to be filled out.

The CRR text does not provide for the possibility for competent authorities to waive the requirements on FINREP reporting, as specified in the ITS on supervisory reporting developed by EBA and adopted by the Commission.


This question goes beyond matters of consistent and effective application of the regulatory framework. A Directorate General of the Commission (Directorate General for Internal Market and Services) has prepared the answer, albeit that only the Court of Justice of the European Union can provide definitive interpretations of EU legislation. This is an unofficial opinion of that Directorate General, which the European Banking Authority publishes on its behalf. The answers are not binding on the European Commission as an institution. You should be aware that the European Commission could adopt a position different from the one expressed in such Q&As, for instance in infringement proceedings or after a detailed examination of a specific case or on the basis of any new legal or factual elements that may have been brought to its attention.

Final Q&A
Answer prepared by:
Answer prepared by the European Commission because it is a matter of interpretation of Union law.