An Australian financial services regulator has released a comprehensive new guidance package designed, the regulator confirmed, to simplify the existing reporting framework for regulated entities. The package, entitled “Simplification of Reporting Requirements: Phase One”, runs to 312 pages and is supplemented by 14 appendices. Industry has been invited to welcome the development.
The package consolidates and replaces seven existing reporting standards, three supervisory letters, and two thematic reviews. It introduces nine new data fields, four new report templates, and a revised submission cadence. The previous quarterly cadence has been retained. The package describes the result as a “streamlined and proportionate framework”.
The regulator confirmed the package was the product of an 18-month consultation process, during which industry stakeholders had been asked to identify reporting requirements that were burdensome, duplicative, or unclear. Submissions identified several. The simplification has retained all of them, on the basis that they remain necessary.
The Short-Form Summary
To assist regulated entities, the regulator has provided a short-form summary of the new framework. The short-form summary is 64 pages. It is intended for executive audiences and includes a glossary, a quick-reference table, and a section titled “Frequently Asked Questions”. The frequently asked questions section is 19 pages. It contains 41 questions. The frequency with which any of the questions has actually been asked has not been disclosed.
The summary opens with a foreword describing the package as a “significant step in reducing reporting burden”. The reduction is achieved by consolidating 14 existing templates into 11 new templates. The 11 new templates contain a total of 217 fields. The original 14 templates contained 198. The regulator described the increase as “necessary to support more granular supervisory insight”.
The short-form summary refers entities to the full guidance for further detail. The full guidance refers entities to the appendices for operational detail. Appendix C contains the new submission templates. Appendix C is 71 pages. Appendix F, which contains the worked examples, is described in the foreword as the most useful section. Appendix F is on page 218.
“We have listened to industry,” the regulator said in a statement accompanying the release. “The new framework reflects feedback received during the consultation, and is materially simpler than the framework it replaces.” The previous framework is provided in Appendix A for reference.
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An industry body representing the institutions affected said it welcomed the development, noting that the regulator had “engaged constructively” with the sector throughout the consultation. The industry body said it would now begin the process of analysing the package in detail, and would communicate guidance to its members in due course. The industry body has 80 members. Each member operates a different reporting platform.
A senior compliance professional at one of the major banks said the simplification was “generally welcome”, but that some elements of the new framework would require operational uplift. Operational uplift would require system changes. System changes would require business cases. Business cases would require a benefits analysis. The benefits analysis would require a comparison with the previous framework. The previous framework is in Appendix A.
A second compliance professional said the institution’s reporting team had “taken initial soundings”, and estimated that implementation would require an additional 14 to 18 full-time roles over a 24-month period. The institution declined to confirm whether the additional roles would be funded by the simplification.
A consultant familiar with the consultation process said the engagement had been “genuine and meaningful”. “The regulator has done what it always does,” the consultant said. “It has consulted, considered, and consolidated. The output is consistent with previous outputs.” Asked to clarify, the consultant said: “It is longer.”
What Happens Next
Phase Two of the simplification is expected in the second half of the next financial year. The regulator confirmed that Phase Two would address the elements not addressed in Phase One, and would build on the Phase One framework to ensure continuity. Phase Two is expected to introduce additional reporting requirements not covered by Phase One. Phase Two will not replace Phase One. Phase One will continue to apply.
A separate consultation paper, also released this week, seeks feedback on whether the simplification process itself could be further improved. The paper is 88 pages. It contains 12 questions. The deadline for responses is 90 days. The deadline is described as appropriate.
The regulator’s most recent annual report describes simplification of the reporting framework as a strategic priority. Simplification has been a strategic priority for seven consecutive years. Each year’s simplification has been longer than the last. The trend has been described, in industry submissions, as well-established. The regulator has acknowledged the feedback. The acknowledgement is set out in Appendix M.
