Latest on Europe
July 2007
This is our latest update for small investment firms affected by the Capital Requirements Directive (CRD)
It comprises short updates on our implementation of the CRD, including:
- regulatory reporting;
- the recognition of eligible credit assessment institutions; and
- new documents on Pillar 2 published on our website.
What's new?
It is less than six months until firms implementing the new CRD rules on 1 January 2008 need to have finalised their Individual Capital Adequacy Assessment Process (ICAAP). This process aims to assess the amount of internal capital that is adequate to cover all of the risks to which a firm is exposed. We have provided further help (insert link) for small firms on this process.
ECAI recognition
In May we recognised Dominion Bond Rating Services (DBRS) as an eligible external credit assessment institution (ECAI) for the purpose of:
- the standardised approach to credit risk; and
- two securitisation-based approaches: the Standardised Approach and the Internal Ratings Based approach.
DBRS's credit assessments can now be used by credit institutions under the above approaches across the EU.
The list of eligible ECAIs and the mapping of their credit assessments to credit quality steps can be found in the Basel 2/CRD pages.
The FSA's Pillar 2 Assessment Framework
On 24 May we published on our website details of our Supervisory Review and Evaluation Process (SREP) in 'Our Pillar 2 assessment framework'. Our review process determines our overall supervisory assessment of a firm's capital assessment including, where appropriate, any resultant risk mitigation programme and the giving of Individual Capital Guidance (ICG). This document should help firms to understand better the rationale for various aspects of our review process and more efficiently manage their dealings with us during the SREP.
In the foreword to the document we set out a number of important principles that will underpin our approach to Pillar 2, including reference points, expectations, etc. We strongly encourage firms to read this short section.
There will be three levels of supervisory review depending on a firm's size and complexity, in line with our risk-based approach to supervision and the concept of proportionality embodied in the CRD and our supervisory framework. The three levels of the SREP are the full review, the streamlined review and the questionnaire approach. We describe each type of review in a separate section of the manual.
New reporting system – have you registered?
Since January 2007, firms subject to CRD have been required to submit additional regulatory data to us (FSA009 and, where applicable FSA028 for Non-EEA Sub-Groups) using the early reporting system (ERS) on our website. In the last edition of this bulletin we gave details of what firms should submit, when to submit it, and how to access ERS. If you are unsure whether your firm is affected by the new reporting requirements please visit the Early Reporting pages.
How to register
If your firm is subject to the new reporting rules under the CRD and you have not yet registered on ERS, you should do so as soon as possible – the log-on details we give to firms are only valid for a limited time. If you have not yet registered, please go to www.fsa.gov.uk/ER/Login.aspx and register your firm using the log-on details we have given you.
If we have not given you log-on details or your log-on details have expired, please contact our Firm Contact Centre by emailing fcc@fsa.gov.uk or by calling 0845 606 9966.
Please remember you should submit the new data for reporting dates from January 2007 only, and you must submit at the same time as your existing reporting. You should only submit new data via ERS.
Additional data required from 2008
Firms affected by the CRD will be required to submit further additional data from January 2008. Please see reporting from 2008 for more information about which data items you will be required to submit.
If you have any questions about the new reporting, please contact fcc@fsa.gov.uk.
