The FCA are proposing a single suite of regulatory reporting for all FCA investment firms. Currently, firms have to complete different sets of returns depending on their category and which prudential sourcebook they fall under.
Regulatory reporting frequency for financial and capital adequacy returns has been set as ‘quarterly’ for all firms. This is one of the biggest deviations so far from the original legislation of the EU’s ‘Investment Firm Directive and Regulation’ which stipulated an annual reporting frequency for SNI firms. COREP reports, FSA001 and FSA002 will be retired by the FCA and replaced with FSA029, FSA030 and a series of new or tailored regulatory returns as follows:
- MIF001 – Capital
- MIF002 – Liquidity
- MIF003 – Monitoring metrics
- MIF004 – Non-K-CON concentration risk monitoring (N/A to SNI firms)
- MIF005 – K-CON – concentration risk reporting where the ‘soft limit’ has been exceeded (N/A to SNI firms)
- MIF006 – GCT reporting
The above list is expected to get longer once the FCA publishes the remaining rules on regulatory reporting in the second consultation paper.
It is also worth noting that although the number of data fields within the returns appear to be lower prima facie, far more complex calculations are required in order to complete the returns accurately. Also, the deadline is more stringent and for some UK based firms, the frequency increases from half-yearly to a quarterly basis. Further, if a firm’s accounting reference date is not aligned with the calendar quarters, firms may face the additional burden of having to report returns for different periods.
Where applicable, firms will need to also report on a consolidated basis. If a firm is subject to prudential consolidation, firms will need to submit most returns on a consolidated basis. However, if the Group Capital Test applies to an investment firm group, each UK parent in the group must submit a separate return explaining how it complies with the relevant requirements.