Pillar 3 builds on the disclosure requirements introduced in many parts of EU following the third Capital Requirements Directive. While similar to the requirements already implemented by the Financial Services Authority (FSA), according to PwC, Pillar 3 is more explicit in terms of the level of detail required and some banks may be concerned about the commercial sensitivity of certain disclosures. Tom Gosling, reward partner at PwC, said: "In spreading disclosure requirements across the Basel population, Pillar 3 marks a step towards a more level global playing field for bank pay. But clearly there will be challenges for regulators outside the EU starting to implement disclosure rules from scratch.
"There are no shockers for UK firms but they may baulk at the level of detail required, as there could be challenges around commercial sensitivity. "The disclosures may be helpful to external stakeholders, such as shareholders, in showing how firms manage risk. However, real change will not come from such submissions, but through regulators' interactions with firms.
PwC says The FSA is likely to implement the requirements in line with it's approach for the FSA remuneration code, with requirements applying to larger firms to a greater degree. Some of the new requirements may only apply to so-called tier 1 and 2 firms.
