UK Regulators Launch Digital Reporting Transformation

The Financial Conduct Authority (FCA) and the Bank of England (Bank) have revealed it is to transform its reporting systems to make better use of technology and digital data.

The FCA said its refreshed Data Strategy sets out a transformation plan to become a highly data-driven regulator.

The strategy outlines the organisation’s increased focus on the use of advanced analytics and automation techniques to deepen its understanding of how markets function and allow the FCA to efficiently predict, monitor and respond to firm and market issues. Alongside investment in new technology and increased use of external data, the FCA will pursue a broader transformation, investing in skills and new ways of working to enable it to better understand and use data and innovative technology. The approach includes data science units being established in selected parts of the organisation and exploitation of new opportunities arising from the FCA’s migration to cloud-based IT infrastructure.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said: “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.”

Sam Woods, Deputy Governor for Prudential Regulation and CEO of the Prudential Regulation Authority, said: “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 more timely, 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.”

John Liver, UK Financial Services Partner at EY, welcomed the announcement.

“The opportunities for regulators to transform both the effectiveness and efficiency of regulation through better use and analysis of data are huge,” he said. “Earlier and more rigorous identification of risks should enable proactive supervisory and policy responses, and more automated data collection should, over time, improve consistency and reduce costs. The path to transformation will require considerable effort from both regulators and the industry over the coming years, but the potential rewards are very significant, and the industry will welcome this strategic direction today.”