On 1 November 2019, the PRA published a Dear CEO letter (dated 31 October 2019) on the reliability of regulatory returns. In the letter, the PRA sets out its expectations for firms to be able to respond promptly to a request to:

• demonstrate how the design and operation of the governance, controls and other processes deliver regulatory reporting of appropriate quality. Firms should also be able to provide details of the key interpretations and judgements made relating to regulatory returns and the governance processes used to validate these; and
• provide the PRA details of any material regulatory reporting errors identified, together with an explanation of the actions taken to remediate them.

The PRA reminds firms that the production and integrity of a firm’s financial information and its regulatory reporting is a prescribed responsibility for senior managers, therefore firms should take action as necessary to ensure the integrity of their returns. An example of such action could include regular, comprehensive reviews of the effectiveness of the governance, controls and other processes around regulatory returns to ensure they are fit for purpose. Additionally, firms could carry out deep dives that look at the accuracy of the returns themselves.

As part of the PRA’s ongoing focus on the integrity of regulatory reporting, the PRA has expressed its intent to commission reports from skilled persons under section 166 of Financial Services and Markets Act 2000. This work will focus on the common reporting framework and will also incorporate other related returns, including newly introduced returns such as the PRA110 Cashflow mismatch template.

The PRA states that these reviews may include:

• a ‘reasonable assurance’ opinion on whether the return reviewed has been properly prepared;
• a review of the relevant governance, controls and other processes; and
• the gathering of information that will enable us to review the key interpretations applied in preparing the return.

According to the PRA, the primary focus of these reviews will be large firms. The PRA will give prior notice to firms if it decides to commission a skilled person review on the firm.