On 16 November, the PRA published CP40/16 Solvency II: Reporting format of National Specific Templates and reporting clarifications. This follows on from CP37/16 Solvency II: Reporting of National Specific Templates published on 25 October and which has now been withdrawn. The regulator stated that "The decision [to withdraw CP37/16] was taken following insight that a number of firms plan to report in XBRL-enabled Excel format for financial year-end 2016".
The key change is that the latest proposals intend firms to submit NSTs in Excel templates via BEEDS when reporting for financial year-end 2016 and future financial year ends. The PRA has published, in Appendix 3 to CP40/16, the National Specific Template Excel templates designed using XBRL principles. The proposal for firms to submit NSTs in standard XBRL format has been withdrawn.
The PRA has announced that "A second CP will follow later with the proposals for future reporting of NSTs".
The withdrawal of a consultation paper is somewhat unusual.
Prior to CP37/16, the industry had planned for Excel submissions of NSTs. The proposal to operate XBRL reporting would have required changes to be made but, certainly for some software providers, this did not seem particularly onerous. Indeed, the Central Bank of Ireland requires relevant firms to submit their NSTs in XBRL format and software solutions have responded accordingly.
The PRA has provided the Excel templates and they can be submitted on a stand-alone basis. Whilst these changes are relatively small they are nevertheless changes. This requires additional work at a time when the industry seeks to implement existing requirements and prepare for the first annual submission under the Solvency II regime. We certainly recognise that we are in a period of development and there will be considerable time "settling in" but this is not particularly welcome.
It is likely that these Excel templates are an interim measure (indeed the regulator refers to their use "in the short to medium term"). The PRA still proposes to standardise reporting (albeit after end December 2016) using XBRL and will address this in this later consultation. This is not unreasonable as this will bring the UK specific templates in line with the harmonised templates. Whilst experience may bring refinements, we would not anticipate that the content of the templates changes to any great extent should the submission format change as expected. We look forward to more clarity on timings.
The PRA has stated that "the reporting clarifications and technical corrections will be identical to those proposed in CP37/16". However, I did note a small number of changes when comparing appendices 4 and 5 in CP40/16 and CP37/16 respectively but deem them insignificant.
Finally, following the publication of CP37/16, OAC identified an issue with the log file for NS.06. We received clarification from the PRA that the £500m threshold for life insurer technical provisions remains and the omission in the CP will be corrected as part of the upcoming Policy Statement. No corresponding change has been made in this latest Consultation Paper so we will check that the Policy Statement continues the original proportionate approach.
How can OAC help?
OAC will continue to monitor Pillar III developments and is well placed to assist firms to meet their reporting requirements and the wider demands of the Solvency II regime.
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