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UK taskforce publishes second report on IFRS 9 expected credit loss disclosures

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13 Dec 2019

In November 2017, the Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and the Prudential Regulatory Authority (PRA) set up the Taskforce on Disclosures about Expected Credit Losses (‘the DECL Taskforce’). The idea being that the Taskforce would be a partnership between preparers and users, coming together to engage constructively on expected credit loss (ECL) disclosure. The model for this was the Enhanced Disclosure Task Force (EDTF).

The DECL Taskforce’s first report consisted of recommendations to describe what a comprehensive set of good ECL disclosures might look like, drawing from and building on existing disclosure recommendations and requirements. The second report now adds guidance and illustrative examples that show how the recommendations in the first report can be presented in a way that enhances comparability between banks.

The second report particularly focuses on disclosures that help users to understand the types and extent of credit risk exposure a bank has and how that risk has evolved; the forward-looking information about macro-economic conditions used in estimating ECL; and the sensitivity of ECL provisions to different macro-economic conditions.  

The guidance is aimed primarily at the biggest UK-headquartered banks and building societies, but is likely to be relevant to a much wider group of preparers.

Please click to download the report from the FRC website.

Please click to download the report from the FRC website.

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