PRA has published a set of Q&A on CRR requirements for property valuations during the disruption caused by Covid-19. Firms have been asking questions on how they shoudl deal with the difficulties in conducting physical inspections and getting reliable information. PRA has addressed these questions, and will update the document as further issues arise. The current questions address:
- expectations of monitoring and review of property valuations under Articles 229(1) and 208(3) CRR: PRA says firms may refer required reviews until they are able to get an updated valuation they are confident to rely on – but it notes that the CRR does not require a physical inspection, so that firms may use desk top and drive-by valuations where appropriate; and
- what firms should do if a House Price Index is unavailable or unreliable: PRA says firms may use the most recent reliable index but it would not expect firms to use an out-of-date index for more than 2 quarters. It also notes that if the index forms part of an IRB approach model, firms will need to notify PRA of any change to index providers.