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Regulator’s spotlight now firmly on COREP returns accuracy

Mark Hirst

Last year, the PRA issued a ‘Dear CEO letter’ setting out its intention to review the accuracy of COREP returns. Now, the Regulator has started to press ahead with their review, and has issued a wave of S166 reviews to investigate individual business’ COREP processes and procedures. We now believe that the next step will be for the FCA to take the same approach for those firms that fall under its regulation.

Common failings

With our history of helping CFD providers navigate the regulatory horizon and mitigate risks, our vast experience has not only been of reviewing regulatory returns but also in preparing them on behalf of many firms. Common mistakes we often find in firms’ current COREP processes include:
  • classifying exposures to third-country investments firms, credit institutions and clearing houses as institutions when the third country does not apply prudential and supervisory requirements to that entity at least equivalent to those applied in the Union;
  • exclusion of the geographical breakdown of credit risk required;
  • exclusion of sundry assets in credit risk, or lack of breakdown of these balances per counterparty to ensure correct classification: and
  • exclusion of capital adequacy ratios in relation to Pillar II adjustments.
How we can help

Many of our clients are now requesting independent reviews over their regulatory reporting systems and controls to gain assurance over the policies and processes they have in place.

However, if you become subject to the requirement for a S166 review to be conducted, Moore has a wealth of experience in conducting such reviews and we will be able to guide you through the entire process.