FCA Handbook - SUP 16 Annex 59 Retail banking business models reporting data

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SUP 16 Annex 59 Retail banking business models reporting data

This annex belongs to SUP 16.34. It sets out the contents of the Retail Banking Business Models Report referred to in SUP 16.34.5R(1).

Terms used in this annex

In this annex, the terms used in column (1) below have the meaning set out in column (2).

(1)	(2)
arranged overdraft	overdraft that is preauthorised by the provider with an agreed limit.
asset finance	a credit arrangement that allows a customer to acquire the use of tangible assets (such as vehicles, machinery or equipment) without paying the full purchase price upfront.
ATM interchange income	income earned from ATM interchange fees.
ATM network direct costs	the direct costs of being part of an ATM network including site rental, equipment, servicing and staff costs, depreciation and amortisation. This does not include interchange costs.
average	(1) the average of a data point as calculated in accordance with the methodology used by the firm for its internal records and systems; or (2) if (1) does not apply, the average of a data point calculated as (A + B) divided by 2, where: (a) A is the value of the data point at the start of the accounting reference period to which the report relates; and (b) B is the value of the data point at the end of the accounting reference period to which the report relates.
average account numbers	the average of the total number of accounts held with a firm. Each account held by a customer should be included in this calculation.
average assets under management	the average value of a firm’s assets under management.
average balance	the average value of a firm’s total book balance.
average credit risk-weighted assets (RWAs)	the average value of a firm’s exposure adjusted by a risk weight that reflects the associated credit risk.
average total customer number	the average total number of unique customers. Where a customer used more than one product or account, the customer should only be counted once.
banking as a service income	income from providing licensed infrastructure, compliance frameworks and banking services (such as payment services, accepting deposits and lending application programming interfaces (APIs)) to other entities that are not in the same group.
basic current account	a payment account with basic features as defined in regulation 19(1) of the Payment Accounts Regulations.
benefit of funding	the value ascribed to a funding source in accordance with a firm’s funds transfer pricing approach.
branch network direct costs	the direct costs of maintaining a branch network including property costs, equipment and branch staff costs, depreciation and amortisation.
business current account	an account held by a business customer which would be a retail current account if held by a consumer.
business customer	any customer that is not a consumer.
business savings account	a savings account held by a business customer.
buy-to-let mortgage	a buy-to-let credit agreement relating to a mortgage on a property.
card interchange income	income from interchange fees relating to debit or credit card transactions.
CET1 ratio	a firm’s common equity tier 1 capital expressed as a percentage of its total risk-weighted assets.
commission income	income from commission.
communications and marketing costs	the direct costs of communications and marketing including switching incentives, sponsorship, staff costs, depreciation and amortisation.
compliance and regulation costs	the costs of complying with regulatory requirements including the payment of regulatory fees, staff costs, depreciation and amortisation.
consumer	a consumer as defined in regulation 2(1) of the Payment Accounts Regulations.
core product	a product referred to in SUP 16 Annex 59.5R to SUP 16 Annex 59.9R.
cost of funds	the cost of funding allocated through funds transfer pricing including interest rate risk transfer costs, liquidity term premium costs, costs of liquidity and any underpinning reference rates.
credit card	an account that allows the holder to use a credit card to borrow funds from the issuer up to a set limit to pay for goods and services.
credit operation costs	costs incurred in credit risk monitoring and recovery including the cost of underwriters and credit risk assessments, credit bureau costs, staff costs, depreciation and amortisation.
customer acquisition costs	operating costs associated with customer acquisition, including a firm’s marketing spend and cost of sales.
customer service and support costs	costs relating to customer service activities including call centre costs, customer statement costs, postage costs, staff costs, depreciation and amortisation.
daily, monthly or annual charge income	income from daily, monthly or annual charges which is not recorded as gross interest income.
default charge income	income from charges to customers for failing to make a repayment when it is due.
early repayment charge income	income from charges to customers for making early repayments which is not recorded as gross interest income.
fixed-term savings accounts – 1 to 2 years	fixed-term savings accounts that have a term between 1 and 2 years, inclusive.
fixed-term savings accounts – over 2 years	fixed-term savings accounts that have a term exceeding 2 years.
gross interest income	interest, and other income treated as interest according to a firm’s effective interest revenue recognition policy, earned through lending activities.
gross interest paid out	interest, and other expenses recognised as interest in a firm’s effective interest recognition policy.
impairment charge	impairments from the recognition of credit losses, including expected credit losses.
initial fixed-rate mortgage	a mortgage in its initial period during which it has a promotional fixed interest rate, and after which it will become a non-SVR mortgage or SVR mortgage.
initial variable-rate mortgage	a mortgage in its initial period during which it has a promotional variable interest rate (eg, a discounted variable rate or tracker rate), and after which it will become a non-SVR mortgage or SVR mortgage.
instant-access savings account	a savings account without a fixed term or notice period for making a withdrawal.
insurance and other add-on fee income	income from insurance products and other add-on products.
international transaction income	fees and foreign exchange margin income from foreign currency transactions made by customers.
investment account	an account through which a customer can hold and transact in investments (eg, shares, bonds and funds), including a stocks and shares ISA.
investment costs	costs relating to business improvement, change or transformation that are expected to have long-term benefits including investment in IT and digital services, depreciation and amortisation.
invoice finance	a business lending arrangement where funds are advanced against the value of unpaid invoices.
IT running costs	business-as-usual information technology costs including staff costs, depreciation and amortisation. This does not include the costs of IT investment and transformation.
leverage ratio	a firm’s tier 1 capital divided by the risk-weighted exposure amount referred to in Article 92(3)(a) of the UK CRR.
loan-to-value ratio (LTV)	the total amount of credit secured by a property (including outstanding balances and any senior liens) divided by the current value of the property.
motor finance	a regulated credit agreement which, in whole or part, finances the purchase of a motor vehicle.
net interest margin	a firm’s net interest income divided by the value of its average interest-earning assets. The definition of ‘average’ above does not apply to this definition.
non-core product	a product offered to customers that is not referred to in SUP 16 Annex 59.5R to SUP 16 Annex 59.9R.
non-interest income	an aggregation of: (1) daily, monthly or annual charge income; (2) origination fee income; (3) default charge income; (4) early repayment charge income; (5) insurance and other add-on fee income; (6) commission income; (7) card interchange income; (8) ATM interchange income; (9) international transaction income; and (10) other and unallocated non-interest income.
non-SVR mortgage	a mortgage which is not an initial fixed-rate mortgage, initial variable-rate mortgage or SVR mortgage.
origination fee income	income from processing and setting up new loans, mortgages and other lending products which is not recorded as gross interest income.
other and unallocated non-interest income	an aggregation of any income from sources other than interest: (1) which is not: (a) daily, monthly or annual charge income; (b) origination fee income; (c) default charge income; (d) early repayment charge income; (e) insurance and other add-on fee income; (f) commission income; (g) card interchange income; (h) ATM interchange income; or (i) international transaction income; or (2) which cannot be allocated to any category of non-interest income in (1).
other business	any business that is not a small business.
other central function costs	staff and other costs of central functions not otherwise specified including human resources, treasury, finance, legal, risk, audit, depreciation and amortisation.
other property costs	leasing and other property costs relating to non-branch property, including head office and call centres. This includes related staff costs, depreciation and amortisation.
overdraft	an overdraft facility for a current account.
owner-occupied mortgage	a residential mortgage for a property occupied by the mortgage holder.
payments and cash handling costs	infrastructure and other costs relating to payment systems, settlement and clearing, cash handling and security. This includes related staff costs, depreciation and amortisation.
personal banking customer	a consumer that is not a wealth customer.
personal current account	a retail current account held by a personal banking customer.
personal investment account	an investment account held by a personal banking customer.
personal lending	lending provided to a personal banking customer.
personal savings account	a savings account, including an ISA, held by a personal banking customer.
primary personal current account	the personal current account into which a customer has their main income paid.
product and proposition costs	staff and other costs of teams involved in developing and maintaining financial products, including depreciation and amortisation.
property finance	small business lending that is secured on properties used for commercial purposes including commercial mortgages, bridging loans and development loans.
residential mortgage	a regulated mortgage contract or buy-to-let credit agreement for a residential property.
retail current account	a payment account, as defined in regulation 2(1) of the Payment Accounts Regulations, other than a current account mortgage.
rewards and packaged current account	a packaged current account that offers rewards or other benefits compared to a standard current account.
risk-weighted assets	a firm’s risk-weighted exposure amount, determined in accordance with Article 92(3)(f) of the UK CRR.
secondary personal current account	a personal current account that is not the customer’s primary personal current account.
secured loan	a loan that is backed by collateral or protected by a guarantor, excluding a mortgage.
small business	(1) any business the firm categorises as a small business; or (2) if (1) does not apply, any business with an annual turnover of up to £2m.
standard personal current account	personal current accounts offered to individuals for everyday banking that are not basic current accounts or rewards and packaged current accounts.
SVR mortgage	a mortgage whose interest rate is the firm’s standard variable rate (SVR).
third-party fraud costs	costs resulting from third-party fraud including depreciation and amortisation.
tier 1 ratio	the sum of a firm’s common equity tier 1 capital and additional tier 1 capital, expressed as a percentage of its total risk-weighted assets.
total capital ratio	the own funds of the firm expressed as a percentage of its total risk-weighted assets.
unarranged overdraft	an overdraft that is not preauthorised by the provider, including any unauthorised balance in excess of an arranged overdraft limit.
under 1 year notice savings account	a savings account with a notice period of less than 12 months for making a withdrawal.
unsecured loan	a loan that is not backed by collateral or protected by a guarantor.
wealth account	a retail current account, investment account or savings account that is only offered to wealth customers.
wealth customer	a consumer the firm offers banking products to because of their high level of wealth or affluence.
wealth lending	any lending products that are only offered to a firm’s wealth customers.
weighted average LTV	a weighted average of the loan-to-value ratio calculated based on loan size. The definition of ‘average’ above does not apply to this definition.
wholesale bank loans and overdrafts	funding obtained from other financial institutions through bilateral or syndicated loan agreements, or overdrafts.
wholesale debt securities on issue	funding raised through the issuance of negotiable instruments such as bonds, notes or commercial paper to institutional investors.
wholesale funding	funding not obtained from consumer or business customer sources.
wholesale subordinated debt	long-term funding raised through instruments that rank below senior obligations in the event of liquidation or insolvency.

Terms in italics in this annex have the meaning set out in the Handbook Glossary.

General

The Retail Banking Business Models Report must include the firm reference number and accounting reference date of each firm in respect of which the report is submitted.