The cost of incorrect regulatory reporting

Ascertaining that your regulatory reporting is correct can be vital for a financial institution. Over the years, FCG has audited regulatory reports of several financial institutions. Finding discrepancies has not been uncommon. We believe that this is because regulatory reporting is often viewed as a necessary evil by institutions. Inadequate resources are spent on reporting and it is often managed by one or two people in the company, making duality nigh impossible.

On October 14, 2020 we found out the cost of incorrect regulatory reports and negligence of the LCR ratio. A financial institution in Sweden received a remark and an administrative fine from the Swedish FSA amounting to a total of 20 million SEK. The company’s liquidity coverage ratio (LCR) has been lower than the binding minimum on several occasions, and the Swedish FSA has not been informed about these deviations. The institution is not systemically important in Sweden, their total assets amounted to as little as 2,3 Bn SEK by year end 2019. The fine should be a clear signal to the financial industry that size does not matter. If you violate the thresholds you will get fined.

The fine also proved that the cost of upholding and maintaining adequate control over your regulatory reporting and liquidity risks will never outweigh the cost and reputational damage that a fine from the FSA:s constitutes.

FCG can assist your company in ascertaining that your regulatory reports are correct and support you in both liquidity and capital planning. We have audited regulatory reports of almost every Swedish bank in supervisory category three and four, achieving best practice industry standards.