BBA Code for Financial Reporting Disclosure

In reflection of their desire to respond to market expectations, the seven institutions and the BBA have agreed to the inclusion of the draft BBA Code in an FSA Discussion Paper on financial reporting disclosures also published today.

The FSA Discussion Paper 'Enhancing financial reporting disclosures by UK credit institutions'  takes stock of developments in financial reporting disclosure since the onset of the financial turmoil. It sets out the FSA's views on the future evolution of UK banks' financial reporting disclosures and how the current level of disclosure can be maintained and the comparability between disclosures enhanced. It presents two options for consultation: the imposition of mandatory standard disclosure templates for all UK banks or the industry led adoption of the draft BBA Code.

To provide the market with an understanding of the impact the BBA Code would have, the seven UK institutions have agreed to comply with the draft Code in preparing their 2009 year-end financial reports. Market participants will therefore be able to assess the impact the draft BBA Code has made before responding to the Discussion Paper by 30 April 2010 deadline.

UK banks strongly believe that their financial reporting practices are amongst the best in the world and that they responded quickly to provide investors with additional information on financial instruments impacted by the financial turmoil when the crisis struck. A key element of the commitment is the codification and formalisation of existing practice to enhance the comparability of disclosures between institutions. The UK banks have a long history of working through the BBA to achieve an appropriate level of consensus.

Commenting on the publication of the draft BBA Code and FSA Discussion Paper Paul Chisnall, BBA Executive Director for Financial Policy and Operations, said:

"UK banks accept there is a great deal of interest in their financial positions and as such are committed to providing high quality disclosures to the users of their financial reports. They firmly believe that their disclosures are at the leading edge of financial reporting practice and that they have evolved their disclosures quickly and appropriately as the financial turmoil has developed.  Nevertheless, they recognise the need to guard against complacency and are happy to formalise their past practice of working through the BBA to identify new trends, understand new requirements and enhance the comparability of their financial statements.

"We firmly believe that the draft BBA Disclosure Code included in the FSA Discussion Paper for comment will provide users of financial reporting with more useful and meaningful information than one size fits all FSA disclosure templates which, by their very nature, will only have limited relevance to the business models and mixes of each institution. I expect market participants to take a similar view, and look forward to discussing feedback on the draft Code with users in the coming months."

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Notes to Editors:

• In recognition of the potential for the BBA Code to be amended or perhaps withdrawn entirely in light of responses to the FSA Discussion Paper, it remains in draft form at present. Nevertheless, Abbey, Barclays, HSBC, Lloyds Banking Group, Nationwide, Standard Chartered and the Royal Bank of Scotland Group have committed to voluntarily implementing the Code in their 2009 year-end annual reports.
• UK financial institutions are required by law to follow International Financial Reporting Standards as promulgated, revised and interpreted by the International Accounting Standards Board and endorsed for use in the European Union by the European Commission. Nothing in the draft BBA Code or FSA Discussion Paper is intended to conflict with this requirement. In addition, UK financial institutions are subject to their obligations under the Listing, Disclosure and Transparency Rules of the FSA Handbook and the other jurisdictions in which they operate.
• In recent years, the BBA has provided a forum for members to hold discussions to achieve an appropriate level of consistency in the adoption of new standards. In this regard, significant work was undertaken in relation to the first time adoption of IFRS in 2005 and the implementation of Pillar 3 and IFRS 7 in 2008. The convergence work set out in the draft Code is a formalisation of this process.
• The draft BBA Code for Financial Reporting Disclosure is available via the link below

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BBA Code for Financial Reporting Disclosure (PDF)

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