Earlier this year, the European Insurance and Occupational Pensions Authority (EIOPA) has published the final FICOD Data Point Model and Taxonomy 2.8.1 for financial conglomerates' reporting.
What is FICOD?
The Financial Conglomerates Directive (FICOD) was originally adopted by the EU in 2002 (Directive 2002/87/EC) in response to the need to supervise, on a group-wide basis, financial groups/conglomerates providing services and products in different sectors of the financial markets, most importantly to bank-insurance groups (so-called “bancassurance groups”).
The Implementing Regulation 2022/2454 sets out the implementing technical standards for the application of the FICOD and will apply as of 31 December 2023.
The UK implemented FICOD through the Financial Conglomerates and Other Financial Groups Regulations 2004 (FICOR) and provisions in the FCA’s Handbook and PRA’s Rulebook.
The primary purpose of the legislation was to address the lack of specific prudential treatment for financial conglomerates, with the aim of elevating greater financial stability and consumer protection.
Who is affected?
The directive applies to financial conglomerates. These are large financial groups or sub-groups with at least one entity in the insurance sector and at least one entity in the banking or investment services sector. One of these entities must be located within the EEA while the other(s) may be located anywhere in the world (including the EEA). For example, a financial conglomerate engaged primarily in insurance would typically be one in which the parent or dominant group entity is an insurance company that has a relatively small banking or investment subsidiary.
31 December 2023 is the first application date for reporting. This means that as of this date, the companies engaged in the financial conglomerate will need to add to their compliance and regulatory reporting tasks a new FICOD reporting package.
Also worth noting is that FICOD is intended for reporting to the coordinating supervisor of national competent authorities, and the data is not submitted to EIOPA.
The updated List of Financial Conglomerates is published on the EIOPA website.
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Currently, the UK’s implementation of FICOD applies specifically to a financial conglomerate where at least one entity is located in the European Economic Area (EEA), while the other(s) can be located anywhere in the world (including the EEA).
The FICOD outlines specific requirements for solvency, aiming to prevent the same capital from being used more than once as a buffer against risk in different entities within the same conglomerate. It also sets out requirements related to conglomerate management, risk management, and information sharing with relevant regulators.
Basically, if a financial conglomerate operating in the EU is subject to FICOD, it will be supervised in terms of capital adequacy, size and complexity, risk concentration, contagion (financial or reputational) and conflicts of interest.
The FICOD coordinator is the National Competent Authority (NCA) which is responsible for the supervision of the conglomerate. It is also important to note that if there are few conglomerates, falling under the FICOD scope, supervised by a single NCA there might be a different reporting frequency for each conglomerate depending on the various factors specific to a given jurisdiction.
Key dates and documentation
First application date for reporting: 31 December 2023
First submission date: 2024
This FICOD DPM and XBRL taxonomy package release 2.8.1 is provided to be used from the 31 December 2023 reference date until a new version is announced in line with the Governance of Taxonomy Release and Plan for reporting taxonomy releases.
The FICOD taxonomy package release 2.8.1 is available on the EIOPA website.
It is a standalone (not integrated) cross-sectoral version to be used for reporting of insurance-led financial conglomerates to the national competent authorities.