Question ID
2025_7342
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Supervisory reporting - FINREP (incl. FB&NPE)
Article
Annex V Part 1
Paragraph
42
Subparagraph
(f)
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Not applicable
Article/Paragraph
Annex V Part 1.42(f)
Type of submitter
Other
Subject matter
Counterparty classification
Question

On FINREP reports, each counterparty is classified into a counterparty type, like Household or Government. Some government services are provided by volunteers, which raises the question how this should be classified, since the people are technically not employed by the government. Examples include volunteer police or volunteer firefighters and their unions, whose members provide and/or facilitate services specific to governments.

Background on the question

In Annex V, it is mentioned that the category Households includes "Non-profit institutions which serve households (‘NPISH’) and which are principally engaged in the production of non-market goods and services intended for particular groups of households". This question is if this also applies when the purpose of the people/union relates to (facilitating) services generally provided exclusively by governments, e.g. firefighting or police.

Submission date
Final publishing date
Final answer

In accordance with some EBA Q&As (e.g. Q&A 2015_1758, Q&A 2017_3424), the European System of National and Regional Accounts (ESA 2010) is used as a basis to report counterparty sector information in FINREP templates. Therefore, the sector breakdown used in FINREP templates follows, to a large extent, the sector breakdown in the ECB BSI Regulation that is also based on the ESA 2010.

As stated in FINREP instructions (Annex V, Part 1, paragraph 42, point (f) of the IT solutions to Regulation (EU) 2024/3117): “Non-profit institutions which serve households (‘NPISH’) and which are principally engaged in the production of non-market goods and services intended for particular groups of households” shall be included in Households counterparty sector.

In accordance with ESA 2010 'the non-profit institutions serving households (NPISHs) sector (S.15) consists of non-profit institutions which are separate legal entities, which serve households and which are private non-market producers. Their principal resources are voluntary contributions in cash or in kind from households in their capacity as consumers, from payments made by general government and from property income'.

Even non-profit institutions which provide services that are generally provided exclusively by governments (e.g. volunteer firefighters or police) basically serve households and are principally engaged in the production of non-market goods and services, therefore they should be classified as Non-profit institutions which serve households (‘NPISH’) and reported under 'Households”, unless they are controlled and mainly financed by the general government or business organisations. In the latter cases they should be included in the counterparty sector 'General government' or “Non-financial corporations”, respectively.

The sectoral classification should be determined on a case-by-case basis in line with the criteria of ESA 2010.

Status
Final Q&A

Disclaimer

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