Previous guidance was provided in March 2020 containing, amongst other things, the approach that should be taken by banks, building societies and PRA-designated investment firms in assessing expected loss provisions under IFRS 9 Financial Instruments.  The aim of the guidance was to ensure that the requirements of IFRS 9 were applied in a consistent way and avoid the risk that they approach the standard differently potentially leading to inappropriate or inconsistent levels of expected credit losses.

The March guidance related to payment holidays, moratoria or deferrals.  As the first payment deferrals are now coming to an end, the FCA has published updated guidance (link to FCA website) on how lenders should treat the payment deferrals at the end of the initial deferral period.  The guidance issued by the PRA is intended as an update to the March guidance to address the accounting consequences of exits from initial payment deferrals. 

Click here for the guidance on the PRA website.  Further updated guidance is available on the PRA website here.