CSSF Circular 22/821 for credit institutions: Filing the SAQ

The on-boarding of the supervised institutions through their participation in the self-assessment questionnaire is an important game-changer to the traditional approach of the Long From Report. 

The similar self-assessment questionnaire for IFMs as of CSSF Circular 21/789, which was already launched last year, has underlined the challenges for the industry of such exercise. Not only did IFMs have to face the novelty of performing such self-assessment for the first time but they also had to confront the level of detail of the required data and information, which is perceived as more granular and specific in comparison to the formerly required prudential reporting.

Such challenges are likely to apply equally to Credit institutions. For MiFID purposes alone there are over 200 potential questions and related numeric data requests that must be addressed, depending on the underlying service model. Institutions, for instance, shall provide detailed numeric information with regards to the passporting activities, by individual client type (retail, professional or eligible counterparty) as well as applicable passporting regime (branch, free provision of services or tied agents). It appears challenging to ascertain and extract data for instance on an advisory mandate that is serviced exclusively in Luxembourg versus advice provided by active solicitation of a client outside of Luxembourg. Do Luxembourg banks even have such granular data with regards to the free provision of services? 

Besides such level of detail and technicality, experience from the IFMs has shown that the identification of the right internal experts and contact persons as well as the set-up of a central governance structure ensuring a smooth coordination across the covered topics and the organisation is key. Understanding the underlying regulation, applying the obligations in a proportional manner to one’s business and organisation as well as identifying and extracting the right data points are vital to ensuring a correct and consistent filling of the SAQ. 

While at first, the SAQ may appear as just another cumbersome and work-intensive regulatory driven reporting, it does bear its opportunities. It is a window into understanding the regulatory interpretations and positions of the CSSF. By focusing on the key data as stipulated by the SAQ, credit institutions may streamline and prioritise their controls and procedures in line with the prudential expectations of the regulator.