PRA disappointed with firms' regulatory reporting

The PRA expects all banks and building societies to submit complete, timely and accurate regulatory returns. It reminded firms of this in an October 2019 Dear CEO Letter and, since then, has been asking firms to demonstrate how they deliver regulatory reporting of appropriate quality, as well as commissioning a number of skilled person reports. 

Earlier this month the PRA published another Dear CEO Letter on the subject, providing feedback on its post October 2019 findings: significant deficiencies were found in a number of firms' processes used for regulatory reporting.

The letter contains the PRA's most material unsatisfactory findings, which at a high level are: 

• Governance and ownership: 
  • Responsibilities were dispersed across multiple individuals and teams, and were delegated too far down the organisation. 
  • Poor governance around key regulatory interpretations including a lack of basic documentation, periodic reviews, and/or appropriate sign-off.
• Controls: A number of gaps in end to end processes for regulatory returns, such as insufficient controls around models, End User Computing and a lack of reconciliation checks for errors.
• Data and investment: Many firms have not prioritised investment in regulatory reporting, leading to reduced capacity and capability compared with financial reporting. Focus is often placed on implementing tactical fixes rather than strategic ones 

The letter also contains high level observations on the PRA's expectations in relation to these areas.

The PRA states that it expects all banks, designated investment firms and building societies to consider the findings in the letter and any work they may need to do to remediate applicable issues, in order to improve their governance, controls, and data related to regulatory reporting. The PRA also notes that, where individual firms fall short of the PRA's expectations, the PRA will consider the full range of supervisory responses and enforcement powers at its disposal.