On 10 September 2021, the PRA published a Dear CEO letter ‘Thematic findings on the reliability of regulatory reporting’.
The Dear CEO letter follows a letter that the PRA sent in October 2019 reiterating its expectation that all banks and building societies submit complete, timely and accurate regulatory returns. Since its letter in October 2019 the PRA asked firms to demonstrate how they deliver regulatory reporting of appropriate quality and also commissioned a number of reports from skilled persons (covering credit and market risk returns at larger firms) under Section 166 of the Financial Services and Markets Act 2000. The Dear CEO letter now published provides feedback on common findings from these reviews and the PRA’s wider supervisory work.
Overall, the key message from the PRA is that it is disappointed to find significant deficiencies in a number of firms’ processes used to deliver accurate and reliable regulatory returns. The PRA states that it is clear that multiple firms did not treat the preparation of their regulatory returns with the same care and diligence that they apply to financial reporting shared with the market and counterparties.
The PRA reminds firms that it expects all firms to submit reliable and accurate regulatory returns and for the regulatory reporting process to receive no less rigour than financial reporting. In the Dear CEO letter the PRA sets out its most material findings covering governance and ownership, controls, and data and investment. The PRA’s expectations for next steps including how firms should act upon these findings are outlined at the end of the Dear CEO letter.