Taskforce on Disclosures about Expected Credit Losses (DECL) publishes updated guidance

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27 Sep, 2022

The Taskforce on Disclosures about Expected Credit Losses ("the DECL Taskforce") has published updated guidance on what good IFRS 9 Expected Credit Loss accounting (ECL) disclosures look like.

In November 2017, the Financial Conduct Authority (FCA), Financial Reporting Council (FRC) and the Prudential Regulatory Authority (PRA) set up 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 report follows two earlier reports published in November 2018 and December 2019.  The 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 added guidance and illustrative examples that showed how the recommendations in the first report could be presented in a way that enhances comparability between banks.  

Whilst the third report does not include a significant number of new recommendations or significant amendments to much of the material contained within the second report, enhancements have been made, the most significant of which are as follows:

  • A comparison of preparers’ and users’ assessments of adoption of selected Taskforce recommendations. This assessment showed greater than 90% “full adoption” of those recommendations.
  • Good practice examples, drawn from banks’ and building societies’ financial statements.
  • Updated recommendations based on the assessments and examples and addressing gaps, deficiencies or to otherwise improve existing material.  In particular the report includes material intended to improve the granularity and comparability of ECL disclosures and enhanced recommendations and supporting material about “judgemental adjustments” (such as post-model adjustments and overlays) made to modelled ECL.  

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

A press release, the updated guidance, a letter from the co-chairs and the Taskforce's Press Release are available on the FRC website.

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