Regulatory Consistency Assessment Programme

Beginning in mid 2014, the Committee intends to expand its efforts to cover the monitoring and assessment of the Basel standards relating to liquidity, leverage ratios and systemically important banks (SIBs). To this end, the Committee is employing a specially developed assessment procedure known as the Regulatory Consistency Assessment Programme (RCAP). The assessment programme is designed to monitor harmonisation of the supervisory systems across member jurisdictions worldwide and identify potential gaps in the Basel regulatory framework.

RCAP was established by the BCBS in 2012 and consists of two modules. The first RCAP module involves "monitoring" of the timely adoption of Basel III standards in regulation via a self-reporting process in which member jurisdictions are called upon to provide regular self-assessments of their progress.

The monitoring module is complemented by the RCAP assessment module, in which BCBS evaluates national legislation to assess the consistency and completeness of the adoption of the Basel standards. To this end, the Committee conducts jurisdictional assessments. These assessments allow the Committee to gauge the extent to which a member jurisdiction’s domestic regulations comply with the international minimum standards. Each member jurisdiction has agreed to undergo such an RCAP assessment. Seven jurisdictional assessments have since been completed.

Table: RCAPs to date

Country	Jurisdictional assessments completed	Overall grade
Brazil	December 2013	compliant
China	September 2013	compliant
Switzerland	June 2013	compliant
Singapore	March 2013	compliant
Japan	October 2012	compliant
European Union	October 2012 (Follow-up assessment 2014)*	-
USA	October 2012 (Follow-up assessment 2014)*	-

* The EU and USA were assessed on the basis of legislation not yet adopted. Therefore no overall grade has been assigned yet.

Procedures and process for conducting jurisdictional assessments

For each jurisdiction, the BCBS assembles an assessment team. This assessment team is made up of the team leader plus five to seven assessors from various jurisdictions who have expertise in the specific areas of focus of the Basel regulatory framework. The team’s composition varies depending upon the assessed jurisdiction. In this regard, nationality plays a decisive role: national European supervisory authorities such as BaFin may not be part of the assessment team for Europe, for example.

The jurisdictional assessments consist of up to four phases:

• Preparation
• Assessment (off- and on-site assessments)
• Review, approval and publication
• Follow-up

Preparation and assessment

In the preparatory phase, the supervisory authority of the assessed jurisdiction completes the RCAP questionnaire, comparing domestic regulations with the corresponding Basel standards. The national supervisory authority also provides a self-assessment on the individual sections.

During the assessment phase, the assessment team reviews the response to the RCAP questionnaire, and makes use of all available material relevant to banking regulation in the relevant jurisdiction, including external reports and data on the banking sector’s structure and composite balance sheet.

The on-site assessment is designed to clarify any deviations identified in the off-site assessment. The assessment team meets with technical experts from the respective supervisory authority, but may also meet with representatives from the banking industry and other relevant market participants. The aim is to get insight into the jurisdiction's regulatory culture from an institutional perspective.

Evaluating the assessment findings

Depending on what differences it identifies, the assessment team gives grades for each of the key components of the Basel framework, which are then summarised into an overall assessment.

The grade "compliant" is assigned if all minimum provisions of the relevant Basel standards have been satisfied and if no material differences have been identified. The grade "largely compliant" means that there are only minor differences with limited impact. Jurisdictions will be assigned the grade "materially non-compliant" if key provisions of the Basel regulatory framework have not been properly implemented. The grade "non-compliant" will be assigned to jurisdictions which have not implemented the provisions at all or in which the differences have severe impacts.

Report, review and follow-up

The assessment teams compile their findings in a report to the BCBS. The Committee provides additional levels of quality assurance for the report's findings and grading in the form of reviews by the Standards Implementation Group (SIG), a review team and a review council. Once the Committee has formally approved the report, it publishes the report together with an opinion by the assessed jurisdiction on its website.

If member jurisdictions subsequently amend their domestic provisions so substantially that it could impact the assessments already performed, the Committee may conduct a follow-up assessment and take steps to update these assessments. This process allows the Committee to assess any challenges or difficulties that jurisdictions face when adopting Basel standards and to assist them in identifying and resolving potential gaps or interpretive issues.