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New proposals for data reforms set by FCA and Bank of England

A revised version of the Data Strategy has been published by the FCA and the Bank of England to enhance data collection and analysis across the financial sector.

The Financial Conduct Authority (FCA) and the Bank of England (Bank) have detailed plans to expand their data and analytics capabilities across the UK financial sector.

Both are reliant on high-quality data to maintain monetary and financial stability, market integrity, effective competition and consumer protection.

The first Data Strategy, published back in 2013, offered information on data collection and how the FCA minimised the burden of the process on firms. Now, in light of the fact that technology and innovation have evolved and revolutionised the industry, the organisation has decided to review its strategy and incorporate new aspects of the digital revolution.

The FCA also estimates that, as the number of regulated firms using advanced techniques increased over the years, it is necessary to understand how to regulate them efficiently. In addition, the ever-increasing number of fines being issued requires regulation from the FCA to adopt a data-driven and automation approach.

A revised Data Strategy

The FCA’s updated Data Strategy outlines its plan to become a highly data-driven regulator. The proposals show the organisation’s strong focus on the usage of advanced analytics and automation techniques – allowing the FCA to predict, monitor, and respond to market and firm issues.

The regulator is also planning on investing in skills and a new approach of working to further understand and use data, along with innovative technology. This will include data science units being incorporated in the organisation and taking advantage of the opportunities provided by the FCA’s migration to cloud-based IT infrastructure.

The objectives of the new data strategy include:

  • Deepening its understanding of markets and consumers to better shape intervention
  • Identifying and connecting to firm and market issues
  • Futureproofing the organisation to react quicker to market changes

The Bank of England and the FCA are working together to improve data collection – moving onto a new platform for the process. They are also aiming at using technology for better regulation, compliance procedures, and firms’ policies.

The Discussion Paper

The Bank of England has published a Discussion Paper (DP), Transforming data collection from the UK financial sector, designed to improve data collection from firms – offering a range of solutions to decrease the burden put on the industry.

The DP launches the review of Huw Van Steenis’ “Future of Finance” report that advised the Bank to expand a digital data strategy.

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, added: “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.”

What’s more, the FCA and the Bank of England have teamed up with seven regulated firms to release the Viability Assessment report on the latest Digital Regulatory Reporting (DRR) pilot. It aims at facilitating the deliverance of data from firms to regulators – decreasing the cost of collection and the burden of data supply, along with enhancing data quality.

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