The Financial Conduct Authority (FCA) and the Bank of England have recently set out their intentions to augment their data and analytics aptitudes. They both rely on the availability to high-quality data to meet their individual targets of both continuing monetary and financial stability, market integrity, effective competition and consumer protection. The FCA’s invigorated Data Strategy sets out a transformation plan to turn into an exceptionally information driven controller. The system indicates the organisation’s increasing focus on the use of cutting-edge analytics and automation strategies to provide more depth into the comprehending of how markets work and enable the FCA to productively foresee, monitor and react to firm and market issues.
In addition to its investment in new technology and greater use of external data, the FCA will seek after a more extensive form of change, putting resources into abilities and finding different methods of working together towards better understanding and using data and technology. This approach involves data science units being implemented in certain areas of the organisation and taking advantage of new opportunities that come about from the FCA’s movement to cloud-based IT infrastructure.
Discussion Paper
The Bank of England has published a Discussion Paper titled Transforming Data Collection from the UK Financial Sector, to advance the timeliness and effectiveness of collecting data from companies across the financial sector. The Discussion Paper of the Bank highlights the initial step of a review that was announced in its response to Huw van Steenis’ Future of Finance report, which recommended that the Bank of England formulate a new digital data strategy. The Discussion Paper also outlines the problems confronting the existing data collection system in place and points out and examines various probable solutions to bring feedback from and warrant further discussion with the industry.
The Executive Director of Strategy and Competition at the FCA, Christopher Woolard, stated the following, “advances in technology are changing the nature of the firms and markets we regulate. Our Data Strategy provides a clear path for us to ensure we have the necessary skills and processes in place to remain at the forefront of this change. In keeping with our Mission, a data-driven approach to regulation allows us to anticipate harms before they crystallise, better understand the effect on consumers of changing business models and to regulate an increasing number of firms efficiently and effectively.”
The Deputy Governor for Prudential Regulation and CEO of the Prudential Regulation Authority, Sam Woods, stated: “having the right data is vital to our role as a regulator, and to the ability of banks and insurers to manage themselves effectively. Recent developments in technology should allow us to improve how we collect data from firms, making reporting timelier, more effective and less burdensome for firms. This is potentially a major change, so we want to work closely with firms to make sure we get it right over the next decade – our Discussion Paper starts that process by setting out the strategic issues in order to stimulate a debate about the way forward.”
Digital Regulatory Reporting
Furthermore, the FCA, the Bank of England and seven regulated companies have published a Viability Assessment report together detailing the latest Digital Regulatory Reporting (DRR) pilot. DRR will likely allow companies to automatically provide data that has been asked for by the regulators, which thereby brings down the cost of collecting the data, which betters the overall quality of data and reduces the burden of providing data on the industry.
DRR also supplies an assessment conducted of the technological and economic factors that could affect a transition towards greater automation in regulatory reporting. Both the FCA and Bank of England will continue to work together on the following:
- Looking into working together on common data standards
- Sanctioning a review together of the legal ramifications of formulating reporting instructions as code
- Sanctioning an independent review together of a few technical solutions examined that forms a part of the Digital Regulatory Reporting (DRR) pilot; and
- Cooperate very closely while engaging with industry and making plans for phases in the future.
