The Australian Prudential Regulation Authority (APRA) is releasing updated EFS reporting standards and guidance for consultation. APRA has designed these changes with the Australian and Bureau of Statistics (RBA) and the Reserve Bank of Australia (RBA) (collectively, ‘the agencies’).
In January 2017, APRA and the agencies commenced consultation on the EFS data collection, which replaced the domestic books collection submitted by authorised deposit-taking institutions (ADIs) and registered financial corporations (RFCs)1. APRA and the agencies released final versions of the EFS reporting standards in January 2019.
The EFS collection was implemented in three phases, with the first phase commencing in March 2019. The second and third phases commenced in July and September 2019 respectively.
Updates to EFS reporting standards and guidance
Incorporating guidance from EFS FAQs
APRA and the agencies developed and implemented the EFS collection in close collaboration with ADIs and RFCs, including developing frequently asked questions (FAQs) for EFS. APRA has highlighted on the EFS FAQ page that where appropriate, it looks to incorporate the guidance provided by the FAQs into the reporting standards, forms, and instructions2. APRA is now providing notice to entities that it intends on incorporating guidance from the FAQs into the reporting standards.
Changes ensuring adequate coverage for publications
Following a comprehensive review of the collections to date, APRA and the agencies developed a small number of additional changes to ensure sufficient coverage for publication purposes. These changes include lowering the reporting threshold on one reporting form and adding additional data items to capture specific segments needed to accurately monitor domestic activities.
Another key change is that APRA and the agencies propose changing the definition of ADI Reporting Category A in Reporting Standard ARS 701.0 ABS/RBA Definitions for the EFS Collection (ARS 701.0), from credit unions and building societies, to a specified list of ADIs that correspond with the current list of entities that report as category A filers. This update is to provide additional clarity and will not change the reporting requirements for ADIs.
These changes are proposed to be effective for the reporting period ending June 2021, with the exception of Reporting Standard ARS 722.0 ABS/RBA Derivatives (ARS 722.0) as discussed below.
Formalising deferral of commencement dates
On 1 April 2020, APRA and the agencies announced that the commencement of ARS 722.0 and Reporting Standard ARS 730.1 ABS/RBA Derivatives is deferred so that the Reporting Standards will apply from 31 March 20213. APRA and the agencies are formalising this deferred commencement by reflecting it in the Reporting Standards.
Appendix A contains a list of all the Reporting Standards that have proposed changes.
A summary of key changes is presented in Appendix B. Please refer to each draft Reporting Standard to consider all the proposed changes.
APRA and the agencies welcome feedback on the proposed changes to the EFS reporting standards and guidance in this letter.
ARF 748.0B: updated item 1.3 (consistency with 748.0A)
Appendix B: Summary of key changes to EFS reporting standards and guidance
Additional fields have been added to item 1 of Reporting Standard ARS 747.0 ABS/RBA Deposits Stocks, Flows and Interest Rates, to replace the ad hoc data currently collected by the RBA on the distribution of interest rates paid on deposits. It will require entities to separately identify the number, value and weighted average interest rate (and value of funds and margin, although these are lower-priority data for the agencies) of deposits outstanding by counterparty and by deposit type for interest rate bands.
Additional fields have been added to Reporting Standard ARS 741.0 ABS/RBA Business Finance to separately identify borrower-accepted commitments to large businesses for the purposes of internal and external refinancing. Currently, the value of borrower-accepted commitments to large businesses is heavily influenced by refinancing. This obscures the measurement of new domestic lending.
Additional fields have been added to Reporting Standard ARS 730.0 ABS/RBA Statement of Financial Performance to separately identify related party management fees that were previously included in derived other income and expense items.
The agencies have reviewed the threshold for reporting on the Reporting Standard ARS 743.0 ABS/RBA Housing Finance (ARS 743.0) and propose to reduce the reporting threshold from $6bn to $3bn of housing credit outstanding. This reduction in the reporting threshold will improve the coverage of loan commitments reported by state which are published in the ABS publication, Lending Indicators (cat.no. 5601.0) without significantly increasing burden on the industry.
Reporting Standard RRS 710 ABS/RBA Audit requirements for Registered Financial Corporations – EFS Collection and relevant reporting standards (ARS 720.0, ARS 720.1, and ARS 720.2) have been amended to reduce the burden on non-ADIs that report in the EFS collection on an annual basis. The relevant time period for an audit report has been shifted from December to the end of reporting entities’ financial years, reflecting feedback from industry.
Table 6 of Reporting Standard ARS 720.1A ABS/RBA Loans and Finance Leases and Reporting Standard ARS 701.0 ABS/RBA Definitions for the EFS Collection have been aligned with APRA’s forthcoming changes to Prudential Standard APS 220 Credit Risk Management1.
Reporting Standard ARS 720.6 ABS/RBA Securities on Issue has been amended to make clear that entities should report the domicile of the security issued, rather than the domicile of the security issuer or holder.
APRA plans to change the ADI Reporting Category A definition in Reporting Standard ARS 701.0 ABS/RBA Definitions for the EFS Collection from all credit unions and building societies to the list of existing credit unions and building societies. For new ADIs, this means that balance sheet size will determine the applicable reporting forms, rather than entity type (credit union, building society and bank). There will also be little scope to transition credit unions and building societies that currently participate in the EFS collection to the reporting forms intended for larger reporting entities if required in the future.