FRC PRA and FCA Taskforce report on Expected Credit Losses
Released 28 November 2018
The Financial Conduct Authority (FCA), the Financial Reporting Council (FRC) and the Prudential Regulatory Authority (PRA) have published a joint report on expected credit losses.
The expected credit losses (ECL) impairment model introduced by the new accounting standard IFRS 9 ‘Financial instruments’ will have a significant effect on how banks calculate loan loss provisions. Given the complexity of these models and the high degree of management judgement involved in these calculations, high quality disclosures are an essential element of successfully implementing this new requirement. In order to facilitate the provision of high-quality disclosures, the FRC together with the PRA and FCA sponsored the Taskforce, which comprises preparers and users, to build on the existing disclosures in IFRS 7 and develop further guidance on high quality disclosures about ECL. The taskforce has now issued its report containing Recommendations on a comprehensive set of IFRS 9 Expected Credit Loss disclosures.