In the UK, banks currently have a number of customer redress provisions. These are provisions to return customers to the financial position they would have been in if they hadn't been unfairly disadvantaged by past banking practices. Determining whether customers have been unfairly disadvantaged and are thus due redress is overseen by the conduct regulator in the UK, the FCA. As well as this, all individual cases can be arbitrated if necessary by a consumer protection body, the Financial Ombudsman Service. In terms of who obliges the banks to pay out redress, it is these regulatory bodies. Their authority derives from legislation. Conversely, banks have established constructive obligations (in IAS 37 terms) to pay redress to their customers by industry practice, and by the communications they have sent to those customers. Looking at template 43, there is no column in the template for provisions arising from regulatory obligations, so we believe we have to choose between classifying these provisions in 040 "Pending Legal Issues and Tax Litigation", or 060 "Other Provisions". We believe that it is possible to consider these regulatory obligations as either "Pending Legal Issues and Tax Litigation" given the IAS 37 definition of "legal obligation" implied by the template, or conversely as "Other Provisions" because of the constructive obligations in effect.
Essentially the issue is that under IAS 37, an obligation could be both a legal obligation and a constructive obligation - they do not seem to be mutually exclusive categories.
In general terms, whenever a classification of the provisions is provided in the financial statements of the reporting entities, the same criteria should be adopted in the template F 43.00 of Regulation (EU) No 680/2014 - ITS on Supervisory reporting. However, if the financial statements do not provide such a classification and an obligation could be considered as both a legal obligation and a constructive obligation under IAS 37, such provisions shall be classified as "Pending legal issue and tax litigation" in the template F 43.00, c040 in order to achieve comparability among the reporting institutions.