01 August 2012

FSA statement regarding CRD IV implementation

The FSA will continue to undertake all preparatory work that is possible in the absence of finalised legislative text, in full expectation that the EU legislation will follow the Basel III implementation timetable. FSA expects all firms in scope of CRD to do likewise.

The draft EU legislation to update the capital requirements framework, known as CRD IV, has been under discussion between the EP, EC and Council of Ministers. These discussions originally aimed to finalise an agreed position by end June 2012 enabling adoption in early July 2012.

Following the delay of the Parliament’s plenary vote and the recent statement by the Rapporteur of the European Parliament and the discussion of the Council of Economic and Finance Ministers, it is clear the legislation will not be adopted earlier than autumn 2012. Following adoption it is necessary for verification, translation and signature of the EU legislation to take place before it can be published in the Official Journal of the European Union. Publication in the Official Journal is a necessary pre-cursor of EU legislation entering into force.

On this basis it does not appear feasible that the legislation can enter into force in line with the implementation date of 1 January 2013 as included in the original European Commission proposal of July 2011. No alternative date has yet been communicated by the EU institutions. Furthermore, reflecting the delay in the negotiation process, the European Banking Authority (EBA) issued a press release on 31 July setting out the potential need to phase-in or flexibly apply certain technical standards to ensure a practical approach to implementation.

In light of these developments the FSA will keep the situation under active review and continue to support the European institutions in their efforts to reach a conclusion on the final version of the legislation.

The FSA will continue to undertake all preparatory work that is possible in the absence of finalised legislative text, in full expectation that the EU legislation will follow the Basel III implementation timetable. FSA expects all firms in scope of CRD to do likewise.

The introduction of Common Reporting, which is incorporated into the requirements in CRD IV, is dependent on delivery of the necessary technical systems and on implementing technical standards to be drafted by EBA under CRD IV and adopted by the European Commission. The FSA is proceeding with the necessary preparatory work to be ready to begin collecting data under Common Reporting for the period beginning 1 July 2013, should the legislation and related standards be finalised by this date. In line with the press release issued by EBA, the FSA will take account of any phase-in plans incorporated into the implementing technical standards on supervisory reporting.

Full statement

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