The European Association of Co-operative Banks (EACB) welcomes the fact that the Commission has acknowledged that supervisory reporting is one of the key challenges facing stakeholders and launched a dedicated fitness check exercise. In this contact, we has taken note of the Report on the Call for Evidence - EU regulatory framework for financial services- to which it also participated- and we support the findings as presented therein when it comes to reporting.
Going forward we therefore hope that this exercise will help addressing the challenges our banks have been facing, and allow ensuring efficient supervisory reporting, and streamlining administrative and compliance costs for firms while ensuring data quality.
We understand that the Commission needed to frame the scope of its consultation in terms of dates, however many significant reporting requirements have entered into force after the end of 2016, and further future requirements are still under preparation. In this regard, we herewith also provide evidence on reporting requirements in force beyond 2016 and we urge the Commission to broaden the scope of its fitness check to take these into account.
In general, we note that:
- The number of reporting requirements is disproportionately high when compared to the relevance of the requested information; there is a multiplicity of information requests on identical themes albeit with different presentation formats and for different authorities thus forcing us to do the exercise several times and revealing a suboptimal level of information-sharing between authorities.
- Several supervisory reporting requirements are incoherent due to redundancy, overlapping and discrepancies (definition of exposure classes, EMIR/MiFIR transaction reportings, leverage ratio reporting…) resulting in a growing burden for reporting entities.
Indeed, the lack of sufficient harmonisation, convergence and information-sharing amongst authorities lead to duplicative reporting requirements and costly implementation tools as we will try to demonstrate in our response below.
Thus, what is really missing is a European holistic approach on how banks can provide the authorities with the relevant information they need to fulfil their mandate at reasonable cost and avoiding overlaps (i.e. harmonize data across data frameworks and to eliminate duplication of reporting requirements).
At the same time, we strongly believe that the guiding principle proportionality should be implemented more consistently with a focus on ensuring financial stability. Small institutions that do not pose a risk to financial stability should only report the positions at a frequency that is strictly necessary for supervision. It is not a lot of information, but high quality and targeted reporting sets that contribute to improved financial stability. Reporting requirements that have little or no added value from this point of view, and for which the costs and (supervisory) benefits are disproportionate, should no longer apply.
In the same vain, financial stability considerations require a rather high level view on risks in relevant sectors. Current reporting requirements in many cases focus too much on details and we fear that the great detail of reported data might not allow the competent authorities to get the necessary overview but let them drowned in details.
At the same time, it is indeed important to reduce the frequency of changes to supervisory reporting requirements –as this creates substantial burden, cost and complexity on its own-, and to allow market participants sufficient time to properly implement any reporting requirements and any – necessary- subsequent changes.
It should also be noted that supervisors are extending their mandate by issuing ITSs and guidelines that go beyond the original mandate given by level-1 legislation (for example in the areas of NPLs and disclosures). Some of these requirements could have unintended consequences for financial stability.
To see our responses to the Consultation in detail please see the attached document.