The Financial Reporting Council (FRC) has criticised proposals from the International Accounting Standards Board (IASB) for amendments to IFRS 9 as failing to meet any of the declared objectives.

The comments are contained in FRC's response to IASB's Exposure Draft (ED) Classification and Measurement: Limited Amendments to IFRS 9.

This ED had three aims: to reduce differences with the Financial Accounting Standards Board (FASB) work in this area; to take into account the interaction with the Insurance Contracts project; and to address implementation issues raised with IFRS 9.

In its response, the FRC says that while the ED proposals go some way to align the model with that under consideration by the FASB, they also introduce unnecessary complexity in financial reporting.

The regulator also says that feedback from the insurance industry suggests the proposals would not fully address their issues, and says these might be better tackled as part of the Insurance Accounting project, rather than holding up the financial instruments project on the basis of the needs of a specific industry sector.

In its discussion of how IFRS 9 should be implemented, the FRC says it does not believe that IASB should implement the proposed third business model, which it says introduces unnecessary complexity in financial reporting, without providing a clear underlying principle.

The FRC is also concerned about possible confusion over the way in which financial assets with a modified economic relationship between principal and interest are to be reported, and says it might be better to devise a principles-based test to categorise the cash flows.

IASB released the ED in November 2012 and consultation on the proposals ended on 28 March 2013.