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PRA Dear CEO letter – Reliability of regulatory returns

PRA Dear CEO letter – Reliability of regulatory returns

Background

  • Reliability of regulatory returns
  • Published by the PRA on 31 October 2019
  • The PRA expects firms to submit complete, timely and accurate regulatory returns.1 These expectations have not changed; the integrity of regulatory reporting is the foundation of effective supervision.
  • The Independent Review of the Prudential Supervision of The Co-operative Bank Plc2 recommended that the PRA should consider introducing more formal third-party reviews of key prudential information supplied by PRA-supervised firms through their regulatory data returns.

Impacts

The PRA expects firms, if asked, 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 with details of any material regulatory reporting errors identified, together with an explanation of the actions taken to remediate them.

The production and integrity of a firm’s financial information and its regulatory reporting is a prescribed responsibility.

The PRA expects firms to take action as necessary to ensure the integrity of its returns. Such action could, for example, include regular, comprehensive reviews of the effectiveness of the governance, controls and other processes around regulatory returns to ensure they are fit for purpose, and to 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, it intends to commission reports from skilled persons (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.

Timeline with relevant dates to be logged on regulatory calendar

Next steps

The PRA expects firms to take action as necessary to ensure the integrity of its returns.

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