Response to consultation on draft Guidelines on resubmission of historical data
Go back
Reporting burden remains high when historical data needs to be resubmitted. The more complex the institution is (number of subsidiaries and subsystems in the group), the more challenging the reporting burden becomes when resubmitting historical data. In addition to the reportings under the EBA reporting framework, there are other reportings which include the same information and which are published externally e.g., annual report. In order to preserve the consistency between the different reportings, this might imply institutions should also change these different reportings that are, for example, already audited by the external auditor or submitted to the national central bank.
The proposed 1-year resubmission policy has a positive side by limiting the time periods to be considered for the submission of corrections. However, resubmitting such number of periods by going back one year prior to the current date for all reporting frequencies would be burdensome for institutions for which we consider the limit could well be shorter.
Therefore, regarding the general approach to the resubmission of historical data, the industry proposes to have a limited timeframe with a uniform methodology for all cases (annual, semi-annual, quarterly and monthly reporting) and to resubmit only until the last year-end period. It would aim to have a simplest solution and a harmonized approach for all frequencies since having several rules depending on the frequencies and the reference dates would add more complexity.
In addition, it would add no supervisory value to cover earlier periods as the most important data from a supervision standpoint are the previous year-end data. In this sense, covering only the previous year-end data instead of resubmitting one year back would be the right balance between the supervisory needs and the capacity constraints for institutions in terms of proportion of costs and time spent on resubmissions.
We also consider that the proposed tolerance limits would lead to a considerable effort without any essential added information value, particularly for larger institutions, according to the large absolute values to be reported, or for banks with highly sufficient ratios.
Imposed reports are extensive and complex, and errors certainly occur, but in many cases these do not have a significant impact in the supervisory data and purpose of these reports or the risk / capital profile of a financial institution. In such a case a resubmission is always an unnecessary cost. In this context, addressing the matter of materiality thresholds would have provided more and better relief than solely the proposed 1-year resubmission policy. The absence of materiality will result in excessive levels of resubmissions which is far from efficient for both banks and supervisors.
There are also various relevant aspects in the proposed Guidelines that should be further developed and clarified such as:
The impact by changes to the taxonomy and how these would affect the resubmission of historical data. It remains unclear how the EBA will handle the changes in DPM and in Validation Rules to previously submitted returns. This will imply difficulties in reconstituting historical data which would not be available if they no longer apply in the current taxonomy or they were not part of the previous taxonomy. In this context, the view of the industry is that dealing with two different taxonomies would be unmanageable as it would require to manage two sets of formats and reports and two specific data collections.
In this sense, we strongly suggest to limit the historical resubmissions to the current taxonomy in place. It would be a derogation from the general principle the industry proposes to apply based on resubmissions until the last annual closing.
Example: The errors or corrections affect quarterly data for Q3 2022 that has been submitted to the competent or resolution authorities and which is considered as the current data in the meaning of the Guidelines. On Q4 2021, the taxonomy X.0 applied and on Q1 2022 the taxonomy X.2 started to apply. In the theoretical principle proposed, the financial institutions should in theory resubmit data for Q3 2022 and the following reference dates: Q2 2022, Q1 2022, Q4 2021. But as the taxonomy changed structurally, the financial institutions would only resubmit until Q1 2022 and not consider Q4 2021 in the batch of resubmissions as Q4 2021 dealt with a former taxonomy.
Paragraph 15 of the Draft Guidelines suggest that corrections to ”all related data” should be resubmitted but it is not clear if this refers to similar data in all returns or all data in the affected return, or both. If resubmissions are to be done for all reports under a reporting framework, this would mean that, for example, for an error of €1000 in credits, all reports where credits are reported should be resubmitted up to 1 year in the past. When linking to actual materiality this would imply an immense burden on the financial institutions. As a way of example, concerning XBRL package, an error on template F18 requires resubmitting all FINREPs deliveries included in the same package given the interlaces between rows and columns. Another example: if there is an error in a report “A” of a data that is also included into report “B”, even in case reports “A” and “B” are independent reports, would it be necessary to resubmit in addition to report “A”, report “B”? If so, this would significantly increase the number of resubmissions.
It is also not addressed in the Guidelines which it may be the time framework for updating the 1-year historical data. Generally, retrieving the data, reprocessing it and filling the templates again would be a time-costly process that would be overlapping with the current remittance date meaning that, for example, the process of historical resubmission probably would have to be fitted in the actual time for submitting end of quarter or monthly templates. This would create a situation where, for example, the reporting teams would be working on the monthly liquidity templates or other actual reports but at the same time having to work on the resubmissions for the last year. Such situation is not feasible since the IT infrastructure only permits to process either the current reporting or reprocessing historical data. The overlap would demand for financial institutions to allocate additional resources and duplicate the IT processes to comply with both.
Related to the publication of EBA Q&A, we consider that any changes as result of the Q&A process should not trigger under any case any historical data resubmissions. Any effect from the Q&A should applicable only to future submissions. Any other situation would be deemed unrealistic since it would entail a huge impact on how currently the reporting processes from a technical point of view are organized. The same holds for improvements that are always done in an incremental way, where any change could trigger 1 year of resubmissions for immaterial errors. Still in the context of Q&A, in case a report is pending a Q&A response, it is not clear what historical information should be resubmitted or whether institutions should resubmit historical data when the updated data are no pending of a Q&A.
The draft Guidelines envisage specific role and processes for the assessment of resubmitted data by the authorities i.e., supervisor, resolution authorities and the EBA. However, the interactions between the institutions, the national supervisors, and the ECB in the context of the resubmission process are not developed and specified. The interactions between all the stakeholders during the resubmission process need to be further clarified. Such situation raises, for example, the following questions: in terms of timing, do authorities access the data at the same time? Are the questions sent to the institutions shared between the authorities? Is there any coordination in the resubmission/question process between NCAs, JSTs and the ECB?
Other related matters:
o Template update: the templates of the reports are updated regularly. Which template should be used in case of resubmission of historical data? The template that was mandatory in each fiscal year or the latest version of the template that is in force at the moment of the resubmission?
o Resubmissions accountability: for resubmissions ratio purposes in the DQ framework, those resubmissions made due to the modification of templates by regulators should not be taken into account, as those errors or inaccuracies are not attributable to the institution.
o Resubmission traceability: it would be very useful when regulator reports to the institution on the received resubmissions to include data/information that allows traceability between the resubmitted data and the dashboard provided by the regulator. For instance, date of resubmission and template name, as per in the annex "Supplementary information" of the dashboard "Management Report on Data Governance and Data Quality".
While the proposed guidelines aim to introduce a uniform approach regarding resubmissions aiming for greater consistency, certainty and practicality to the resubmissions of data, we consider they fail to address the core concern that was at the origins of these EBA Draft Guidelines on historical data resubmissions themselves i.e., to reduce the costs related to data resubmissions. Under the proposed approach, it is not only that they could lead in practice to more resubmissions by financial institutions but these would, additionally, need to allocate resources to comply with the extensive requirements on the resubmissions of historical data. Likewise on the side of authorities i.e., regulator and supervisor, with the need of additional resources to check all resubmissions.
As a general comment, the Guidelines emphasize the idea that a data point by data point approach should prevail over a risk-based approach, which from our view, would be more relevant in the specific context of resubmissions. This would be aligned with the ECB strategy, as this risk-based approach has been developed by the ECB as part of its work on significant resubmissions, along with the determination of targeted key risk indicators. In this sense, we suggest that it should be also followed through the prism of the general approach to resubmission of historical data.
Based on all the above considerations, it is our view that the proposed framework is rather limited on reducing the current complexity from a cost-benefit perspective. It requires to be further developed and designed along the comments provided throughout this document and taking greater account of the cost-benefit considerations towards finding the right balance between what would be useful for the supervisor needs and what would be feasible for institutions by, among others, avoiding time consuming processes which require to spend huge time involvement on corrections of minor errors from previous reporting dates and on remediation plans.
The EBA should review Paragraphs 14, 17 and 20 of the Draft Guidelines for consistency where financial institutions discover inaccuracies or errors in reported historical data.
The EBA should also review paragraphs 11-13 of the Background and rationale and paragraph 17 of the Draft Guidelines and clarify what is meant by “affect”. The text implies that this means the data in which the issue was first identified given that the resubmission varies for quarterly data depending on whether the issue was identified in quarterly (12.) or monthly (13. c.) reporting data.
Accordingly, the concept of undue delay should be reconsidered as revising data for up to four quarters would require financial institutions to allocate and commit substantial resources for a significant period of time to produce the data and prepare it for resubmission.
We are also concerned that the aim of standardising the approach to resubmissions would be undermined by paragraph 29 of the Draft Guidelines under which competent and resolution authorities could require financial institutions to resubmit historical data for additional reference dates compared to the Guidelines.
Furthermore, existing legislation (Article 3(4) of Commission Implementing Regulation (EU) 2021/451 emphasises the pre-eminence of audited over unaudited figures because these are “figures audited by an external auditor expressing an audit opinion”. This implies that the basis for compiling audited figures is appropriate and the application of low materiality thresholds would add costs without necessarily enhancing data quality or usefulness.
In addition, there are some specific cases where the regulator requests to submit data with wrong figures due to erroneous templates (and which are consequently not aligned with the consistency checks developed through the EBA validation rules). As they derive from requests from the regulator to override the issues due to wrong templates, these specific cases should not be considered as errors on historical data for the next reporting periods in the context of these guidelines, and resubmissions of such wrong historical data should not be requested accordingly. This specific example also underlines the importance of providing some flexibility in the proposed approach to (i) take into consideration specific situations and (ii) grant waivers when such cases are met.
Moreover, there are also some specific cases where the regulator requests to resubmit data of several reporting periods due to non-official EGDQs. As institutions are not pre-informed and aware of these additional consistency checks, these non-official EGDQs should also not be considered in the context of these guidelines. These guidelines should apply in the same way for the institutions and the regulator and the specific resubmission requests should be limited.
Accordingly, we consider that the resubmission limit regarding past reference dates should not exceed the previous annual reference date.
We also suggest that a change in an interpretation or assumption would not constitute an error.
Finally, we strongly recommend amending Article 3(5) of Commission Implementing Regulation (EU) 2021/451, to allow the EBA/NCAs/ECB to include the materiality concept and, in a second step, to release specific guidelines in order to develop specific rules to calculate such materiality indicators that would trigger resubmissions.
Furthermore, depending on the platforms used by the competent authority, a financial institution may have to restate each return one by one rather than as a batch, with each return subject to review through governance. This would add to the timeframe for resubmissions. Errors related to modelled outputs could take substantially more time to address.
For some financial institutions, the guidelines would clearly demand a substantial investment in IT infrastructure not considering feasible to apply the required changes from a technology perspective by end 2023. It is, for example, that in order to be able to restore historical data going back in time to four previous reference dates, the data must be historized in the systems upstream that would need to be re-configured. However, the reporting tools and IT solutions currently in place in some institutions are not capable of storing the historical reporting parameters in order to resubmit the historical data when there are changes in taxonomy or regulations. What is more, additional investments and workload would occur for editors to rework former taxonomies. Therefore, the scenarios when resubmissions of historical data may not be required should be extended to regulatory and taxonomy changes and should not be limited to the cases already presented in the EBA consultation.
Furthermore, financial institutions will have to implement simultaneously the changes brought about by the implementation of Basel 4 and these new guidelines for the resubmission of historical data if they apply from 31 December 2023. However, at present, given the stakes of regulatory projects, IT departments are prioritizing developments linked to the implementation of Basel 4-induced changes and establishment of the IT infrastructure for the integrating sustainability data. Therefore, in order to ease the implementation of the guidelines, it would be suggested a transition period during the implementation of Basel 4 for which data resubmissions will be limited to the current reference period.
Fixing materiality thresholds at unnecessarily low levels would increase the reporting burdens and costs on institutions without delivering material benefits to supervisors. If materiality thresholds are to be specified, they should be relative and proportionate, such as those currently adopted in bank policies and similar, for example, to the approach recently proposed by the ECB for supervisory data that is rather than absolute values.
In this context, and since both EBA and ECB have stressed in various opportunities an open dialogue between both institutions about their respective workstreams on the resubmission field, we strongly advise the EBA to consider the ECB work undertaken with key risk indicators (KRIs) and applicable thresholds as part of the ECB management report on data governance and data quality as well as the ECB significant resubmissions policy with the ongoing pilot exercise ending by mid next year.
In fact, since we consider the proposed EBA approach is not efficient and far from properly addressing the resubmission of historical data without resulting in unnecessary burden and cost for both banks and authorities, the EBF is working with banks across Europe towards a proposal that is more adequate for triggering historical data resubmissions. We will be in position to present this industry proposal in the course of September for which we will appreciate to start coordinating with the EBA for a meeting to present and explain our proposal.
The industry proposes to have a uniform methodology for all cases (annual, semi-annual, quarterly and monthly reporting) and to resubmit only until the last year-end period. This general approach to resubmission of historical data would apply to all types of institutions (large, medium-sized and SNCI). It would aim to have a simplest solution and a harmonized approach for all frequencies and all types of institutions regardless of their size.
1. What are your general views on the proposed approach to the resubmission of historical data?
As stated by the EBA, the industry identified, in the context of the EBA Report on the cost of compliance with supervisory reporting requirements, the current framework for the resubmissions of historical data as one of the main problems resulting in high costs for financial institutions. Accordingly, the EBF welcomes the EBA attention to the concerns conveyed by the industry and the endeavours to provide relief.Reporting burden remains high when historical data needs to be resubmitted. The more complex the institution is (number of subsidiaries and subsystems in the group), the more challenging the reporting burden becomes when resubmitting historical data. In addition to the reportings under the EBA reporting framework, there are other reportings which include the same information and which are published externally e.g., annual report. In order to preserve the consistency between the different reportings, this might imply institutions should also change these different reportings that are, for example, already audited by the external auditor or submitted to the national central bank.
The proposed 1-year resubmission policy has a positive side by limiting the time periods to be considered for the submission of corrections. However, resubmitting such number of periods by going back one year prior to the current date for all reporting frequencies would be burdensome for institutions for which we consider the limit could well be shorter.
Therefore, regarding the general approach to the resubmission of historical data, the industry proposes to have a limited timeframe with a uniform methodology for all cases (annual, semi-annual, quarterly and monthly reporting) and to resubmit only until the last year-end period. It would aim to have a simplest solution and a harmonized approach for all frequencies since having several rules depending on the frequencies and the reference dates would add more complexity.
In addition, it would add no supervisory value to cover earlier periods as the most important data from a supervision standpoint are the previous year-end data. In this sense, covering only the previous year-end data instead of resubmitting one year back would be the right balance between the supervisory needs and the capacity constraints for institutions in terms of proportion of costs and time spent on resubmissions.
We also consider that the proposed tolerance limits would lead to a considerable effort without any essential added information value, particularly for larger institutions, according to the large absolute values to be reported, or for banks with highly sufficient ratios.
Imposed reports are extensive and complex, and errors certainly occur, but in many cases these do not have a significant impact in the supervisory data and purpose of these reports or the risk / capital profile of a financial institution. In such a case a resubmission is always an unnecessary cost. In this context, addressing the matter of materiality thresholds would have provided more and better relief than solely the proposed 1-year resubmission policy. The absence of materiality will result in excessive levels of resubmissions which is far from efficient for both banks and supervisors.
There are also various relevant aspects in the proposed Guidelines that should be further developed and clarified such as:
The impact by changes to the taxonomy and how these would affect the resubmission of historical data. It remains unclear how the EBA will handle the changes in DPM and in Validation Rules to previously submitted returns. This will imply difficulties in reconstituting historical data which would not be available if they no longer apply in the current taxonomy or they were not part of the previous taxonomy. In this context, the view of the industry is that dealing with two different taxonomies would be unmanageable as it would require to manage two sets of formats and reports and two specific data collections.
In this sense, we strongly suggest to limit the historical resubmissions to the current taxonomy in place. It would be a derogation from the general principle the industry proposes to apply based on resubmissions until the last annual closing.
Example: The errors or corrections affect quarterly data for Q3 2022 that has been submitted to the competent or resolution authorities and which is considered as the current data in the meaning of the Guidelines. On Q4 2021, the taxonomy X.0 applied and on Q1 2022 the taxonomy X.2 started to apply. In the theoretical principle proposed, the financial institutions should in theory resubmit data for Q3 2022 and the following reference dates: Q2 2022, Q1 2022, Q4 2021. But as the taxonomy changed structurally, the financial institutions would only resubmit until Q1 2022 and not consider Q4 2021 in the batch of resubmissions as Q4 2021 dealt with a former taxonomy.
Paragraph 15 of the Draft Guidelines suggest that corrections to ”all related data” should be resubmitted but it is not clear if this refers to similar data in all returns or all data in the affected return, or both. If resubmissions are to be done for all reports under a reporting framework, this would mean that, for example, for an error of €1000 in credits, all reports where credits are reported should be resubmitted up to 1 year in the past. When linking to actual materiality this would imply an immense burden on the financial institutions. As a way of example, concerning XBRL package, an error on template F18 requires resubmitting all FINREPs deliveries included in the same package given the interlaces between rows and columns. Another example: if there is an error in a report “A” of a data that is also included into report “B”, even in case reports “A” and “B” are independent reports, would it be necessary to resubmit in addition to report “A”, report “B”? If so, this would significantly increase the number of resubmissions.
It is also not addressed in the Guidelines which it may be the time framework for updating the 1-year historical data. Generally, retrieving the data, reprocessing it and filling the templates again would be a time-costly process that would be overlapping with the current remittance date meaning that, for example, the process of historical resubmission probably would have to be fitted in the actual time for submitting end of quarter or monthly templates. This would create a situation where, for example, the reporting teams would be working on the monthly liquidity templates or other actual reports but at the same time having to work on the resubmissions for the last year. Such situation is not feasible since the IT infrastructure only permits to process either the current reporting or reprocessing historical data. The overlap would demand for financial institutions to allocate additional resources and duplicate the IT processes to comply with both.
Related to the publication of EBA Q&A, we consider that any changes as result of the Q&A process should not trigger under any case any historical data resubmissions. Any effect from the Q&A should applicable only to future submissions. Any other situation would be deemed unrealistic since it would entail a huge impact on how currently the reporting processes from a technical point of view are organized. The same holds for improvements that are always done in an incremental way, where any change could trigger 1 year of resubmissions for immaterial errors. Still in the context of Q&A, in case a report is pending a Q&A response, it is not clear what historical information should be resubmitted or whether institutions should resubmit historical data when the updated data are no pending of a Q&A.
The draft Guidelines envisage specific role and processes for the assessment of resubmitted data by the authorities i.e., supervisor, resolution authorities and the EBA. However, the interactions between the institutions, the national supervisors, and the ECB in the context of the resubmission process are not developed and specified. The interactions between all the stakeholders during the resubmission process need to be further clarified. Such situation raises, for example, the following questions: in terms of timing, do authorities access the data at the same time? Are the questions sent to the institutions shared between the authorities? Is there any coordination in the resubmission/question process between NCAs, JSTs and the ECB?
Other related matters:
o Template update: the templates of the reports are updated regularly. Which template should be used in case of resubmission of historical data? The template that was mandatory in each fiscal year or the latest version of the template that is in force at the moment of the resubmission?
o Resubmissions accountability: for resubmissions ratio purposes in the DQ framework, those resubmissions made due to the modification of templates by regulators should not be taken into account, as those errors or inaccuracies are not attributable to the institution.
o Resubmission traceability: it would be very useful when regulator reports to the institution on the received resubmissions to include data/information that allows traceability between the resubmitted data and the dashboard provided by the regulator. For instance, date of resubmission and template name, as per in the annex "Supplementary information" of the dashboard "Management Report on Data Governance and Data Quality".
While the proposed guidelines aim to introduce a uniform approach regarding resubmissions aiming for greater consistency, certainty and practicality to the resubmissions of data, we consider they fail to address the core concern that was at the origins of these EBA Draft Guidelines on historical data resubmissions themselves i.e., to reduce the costs related to data resubmissions. Under the proposed approach, it is not only that they could lead in practice to more resubmissions by financial institutions but these would, additionally, need to allocate resources to comply with the extensive requirements on the resubmissions of historical data. Likewise on the side of authorities i.e., regulator and supervisor, with the need of additional resources to check all resubmissions.
As a general comment, the Guidelines emphasize the idea that a data point by data point approach should prevail over a risk-based approach, which from our view, would be more relevant in the specific context of resubmissions. This would be aligned with the ECB strategy, as this risk-based approach has been developed by the ECB as part of its work on significant resubmissions, along with the determination of targeted key risk indicators. In this sense, we suggest that it should be also followed through the prism of the general approach to resubmission of historical data.
Based on all the above considerations, it is our view that the proposed framework is rather limited on reducing the current complexity from a cost-benefit perspective. It requires to be further developed and designed along the comments provided throughout this document and taking greater account of the cost-benefit considerations towards finding the right balance between what would be useful for the supervisor needs and what would be feasible for institutions by, among others, avoiding time consuming processes which require to spend huge time involvement on corrections of minor errors from previous reporting dates and on remediation plans.
2. How do you see the proposed approach in relation to your existing resubmission policies set out in your institutions, agreed with internal audit and control functions?
Whilst the proposed approach is setting a common resubmission framework in terms of thresholds and reference dates, we consider it should provide for the possibility for competent authorities or JSTs to continue to provide guidance to institutions on the corrections of errors and the reduced set of data to be resubmitted according to the specific situations encountered i.e., evolution of the taxonomy making it difficult to resubmit historical data, non-material errors. The approach requires extending the correction of the historical data for one reference date to the other reference dates. We question the relevance of the request given the cumbersome nature of the IT processing to extend the corrections (in relation to existing conventions) and the expected benefits.The EBA should review Paragraphs 14, 17 and 20 of the Draft Guidelines for consistency where financial institutions discover inaccuracies or errors in reported historical data.
The EBA should also review paragraphs 11-13 of the Background and rationale and paragraph 17 of the Draft Guidelines and clarify what is meant by “affect”. The text implies that this means the data in which the issue was first identified given that the resubmission varies for quarterly data depending on whether the issue was identified in quarterly (12.) or monthly (13. c.) reporting data.
3. How do you see the proposed approach in relation to actual practices for the resubmission of data also considering the legal requirements set out in existing legislation (e.g. Article 3(5) of Commission Implementing Regulation (EU) 2021/451)?
It is a general concern across banks that the proposed approach would lead to more resubmission as a result of minor issues detected and/or improvements implemented compared to current practices, often resulting in higher costs for institutions. For example, the reporting burden for resubmissions for monthly reports (liquidity ones for example) is very high as depending on the current position date up to 12 resubmissions could be triggered e.g., current reference date = December 2023, then resubmissions required for all previous periods until December 2022.Accordingly, the concept of undue delay should be reconsidered as revising data for up to four quarters would require financial institutions to allocate and commit substantial resources for a significant period of time to produce the data and prepare it for resubmission.
We are also concerned that the aim of standardising the approach to resubmissions would be undermined by paragraph 29 of the Draft Guidelines under which competent and resolution authorities could require financial institutions to resubmit historical data for additional reference dates compared to the Guidelines.
Furthermore, existing legislation (Article 3(4) of Commission Implementing Regulation (EU) 2021/451 emphasises the pre-eminence of audited over unaudited figures because these are “figures audited by an external auditor expressing an audit opinion”. This implies that the basis for compiling audited figures is appropriate and the application of low materiality thresholds would add costs without necessarily enhancing data quality or usefulness.
In addition, there are some specific cases where the regulator requests to submit data with wrong figures due to erroneous templates (and which are consequently not aligned with the consistency checks developed through the EBA validation rules). As they derive from requests from the regulator to override the issues due to wrong templates, these specific cases should not be considered as errors on historical data for the next reporting periods in the context of these guidelines, and resubmissions of such wrong historical data should not be requested accordingly. This specific example also underlines the importance of providing some flexibility in the proposed approach to (i) take into consideration specific situations and (ii) grant waivers when such cases are met.
Moreover, there are also some specific cases where the regulator requests to resubmit data of several reporting periods due to non-official EGDQs. As institutions are not pre-informed and aware of these additional consistency checks, these non-official EGDQs should also not be considered in the context of these guidelines. These guidelines should apply in the same way for the institutions and the regulator and the specific resubmission requests should be limited.
Accordingly, we consider that the resubmission limit regarding past reference dates should not exceed the previous annual reference date.
We also suggest that a change in an interpretation or assumption would not constitute an error.
Finally, we strongly recommend amending Article 3(5) of Commission Implementing Regulation (EU) 2021/451, to allow the EBA/NCAs/ECB to include the materiality concept and, in a second step, to release specific guidelines in order to develop specific rules to calculate such materiality indicators that would trigger resubmissions.
4. Would the proposed approach be feasible from the technology perspective considering the current reporting solutions?
The severity of the technological constraints would depend on the issue at hand and to what extent recalculations are needed e.g., it could be that the relevant underlying data is not available anymore to perform new calculations given the current retention periods for data on the lowest levels, there is an overlap between the processes for a current reporting and resubmissions, etc.Furthermore, depending on the platforms used by the competent authority, a financial institution may have to restate each return one by one rather than as a batch, with each return subject to review through governance. This would add to the timeframe for resubmissions. Errors related to modelled outputs could take substantially more time to address.
For some financial institutions, the guidelines would clearly demand a substantial investment in IT infrastructure not considering feasible to apply the required changes from a technology perspective by end 2023. It is, for example, that in order to be able to restore historical data going back in time to four previous reference dates, the data must be historized in the systems upstream that would need to be re-configured. However, the reporting tools and IT solutions currently in place in some institutions are not capable of storing the historical reporting parameters in order to resubmit the historical data when there are changes in taxonomy or regulations. What is more, additional investments and workload would occur for editors to rework former taxonomies. Therefore, the scenarios when resubmissions of historical data may not be required should be extended to regulatory and taxonomy changes and should not be limited to the cases already presented in the EBA consultation.
Furthermore, financial institutions will have to implement simultaneously the changes brought about by the implementation of Basel 4 and these new guidelines for the resubmission of historical data if they apply from 31 December 2023. However, at present, given the stakes of regulatory projects, IT departments are prioritizing developments linked to the implementation of Basel 4-induced changes and establishment of the IT infrastructure for the integrating sustainability data. Therefore, in order to ease the implementation of the guidelines, it would be suggested a transition period during the implementation of Basel 4 for which data resubmissions will be limited to the current reference period.
a. If not, please provide concrete and realistic proposals for improving the proportionality element that can be efficiently implemented in the reporting systems without unreasonable costs or increasing the overall complexity.
A proportionality principle should be included since there are certain changes within the report that do not imply distortion of the report due to their immateriality and for which the resubmission obligations should not apply.Fixing materiality thresholds at unnecessarily low levels would increase the reporting burdens and costs on institutions without delivering material benefits to supervisors. If materiality thresholds are to be specified, they should be relative and proportionate, such as those currently adopted in bank policies and similar, for example, to the approach recently proposed by the ECB for supervisory data that is rather than absolute values.
In this context, and since both EBA and ECB have stressed in various opportunities an open dialogue between both institutions about their respective workstreams on the resubmission field, we strongly advise the EBA to consider the ECB work undertaken with key risk indicators (KRIs) and applicable thresholds as part of the ECB management report on data governance and data quality as well as the ECB significant resubmissions policy with the ongoing pilot exercise ending by mid next year.
In fact, since we consider the proposed EBA approach is not efficient and far from properly addressing the resubmission of historical data without resulting in unnecessary burden and cost for both banks and authorities, the EBF is working with banks across Europe towards a proposal that is more adequate for triggering historical data resubmissions. We will be in position to present this industry proposal in the course of September for which we will appreciate to start coordinating with the EBA for a meeting to present and explain our proposal.
6. If such additional proportionality proposals are to be based on less historical reference dates to be resubmitted (compared to those set out in paragraph 17), then what could these be for different types of institutions (large, medium-sized, SNCI)?
We consider the ECB approach, usage of relative thresholds and its declination for historical resubmissions would fit well institutions regardless of their size.The industry proposes to have a uniform methodology for all cases (annual, semi-annual, quarterly and monthly reporting) and to resubmit only until the last year-end period. This general approach to resubmission of historical data would apply to all types of institutions (large, medium-sized and SNCI). It would aim to have a simplest solution and a harmonized approach for all frequencies and all types of institutions regardless of their size.