The financial services industry has recently undergone a major change due to the introduction of IFRS 9 impairment requirements. This has come generally at increased costs due to either the redirection of internal resource or engagement of third parties to develop compliant models.
The changes needed to meet the new IFRS 9 requirements are substantial and will require significant thought and effort by individual organisations and their advisors to develop a compliant solution that is right for them. Some larger, more complex and systemically significant organisations have been working on this for a number of years and still don’t have all of the answers
In response to the financial crisis of 2007-2008, the International Accounting Standards Board (IASB) is replacing the “incurred loss” model for loan provisioning (IAS39) with an “expected loss” model for loan provisioning (IFRS 9).