The UK Financial Conduct Authority has published a new "Dear CEO" letter that it has sent to the Chief Executive Officers of certain firms for which it acts as prudential regulator.
The letter is addressed to the CEOs of "IFPRU Firms" (firms solo-regulated by the FCA that fall within the definition of "investment firm" in the Capital Requirements Directive and which are subject to the requirements of CRDIV) and "BIPRU Firms" (firms solo-regulated by the FCA that fall outside the definition of "investment firm" for CRD IV purposes). The FCA has observed that the prudential returns (in particular the Common Reporting (COREP) and Financial Reporting (FINREP) returns) submitted by these firms often contain inaccurate or incomplete data. The FCA stresses that, while errors or omissions can appear minor in isolation, they can materially distort data that are aggregated and used to analyse a sector or a group of firms.
Examples of the issues the FCA has observed include; failure to submit certain returns, such as the FINREP return; failure to complete underlying templates; inaccurate calculations; inconsistent submissions; reporting using incorrect units; and failure to report cumulatively where that is required.
The FCA instructs CEOs of IFPRU and BIPRU firms to review their firm’s regulatory reporting practices to ensure that they are fit for purpose, comply with the relevant reporting provisions and produce materially accurate data. The FCA plans to conduct a review of a sample of firms' returns as of October 1, 2018 and, should the same issues persist at that time, it will consider taking further steps to improve reporting standards.
View the Dear CEO letter.
