It is often said that the Bank of England (Bank), the Prudential Regulation Authority (PRA), and the Financial Conduct Authority (FCA), are as much data regulators as they are financial regulators. In order to properly discharge their statutory objectives, supervise firms adequately and make appropriate market interventions, each regulator is reliant on collecting significant amounts of data from firms and the markets in which they operate. Data will also often inform how policy judgements are made and the final form of regulatory change projects.
The FCA's work with firms on digital regulatory reporting (initiated in 2018) and the Bank's data collection review (carried out in 2020) demonstrated that data collection (that is the process of collecting data from firms) gives rise to many challenges for the regulators and for the many thousands of firms that are regulated. The regulators acknowledge that one of the most difficult areas of regulation is reporting and recognise that the data they receive is not always of the highest quality. At the same time, as technology and business models have evolved, the data needs of the regulators have changed.
In July 2021, the Bank and the FCA launched a joint transformation programme (Programme) together with industry to address these issues and deliver improvements to data collection over a period of 10 years.
The Programme's objective is to ensure that "regulators get the data they need to fulfil their mission, at the lowest possible cost to industry." It identified three core measures as being essential to delivering this vision:
The Programme is modelled on the Government Digital Service's industry-standard Service Design Approach and is divided into phases with each phase consisting of a number of use cases. A use case is defined as a "a collection, set of collections or aspect of a data collection." The use cases then enter a 'discovery and design stage', in which issues and design solutions are explored. Finally, they pass through an 'implementation stage' (also referred to as Beta stage).
To ensure effective collaboration with industry, the Bank and the FCA have created a governance and delivery framework for the Programme. There are two delivery groups: a Core Delivery Team and the Advisory Group. The Programme is overseen by the Reporting Transformation Committee and the Data Standards Committee (DSC), each of which meets monthly.
The regulators have also established a Reporting and Data Standards Transformation Board. The Board meets every four months and is intended to serve as a forum for discussing issues of common concern regarding reporting and the development of data standards with the aim of ensuring better reporting. The Board is empowered to look at issues and initiatives which go outside the remit of the Programme.
Phase One began in July 2021 with three use cases in scope:
The Phase One discovery and design stage finished at the end of March 2022. Because of a lack of resource, it was decided that work on the commercial real estate database would be folded into Phase Two. The delivery teams identified a series of themes, which cut across the use cases and which appeared to have similar root causes. These include:
The combined impact of these issues for the regulators and firms that are regulated is significant. It means that time is wasted, the quality of data is poorer and the data is less useful for regulators. It is also a source frustration and stress for those collecting and using the data.
The Programme made seven recommendations, which the Bank and the FCA agreed to accept in principle, and are structured as "short term", "medium term", and "long term" relating to the Form DQ and the Financial resilience survey use cases. A summary of the recommendations and the regulators' responses can be found here.
The initial implementation stage began in September 2022 and ran to approximately Q2 2023. The Bank has made significant changes to the design of the landing page for Form DQ as part of a redesign of the landing page for statistical reporting; further work is required to streamline reporting instructions. For the Financial resilience survey use case, the FCA is introducing a new financial resilience report for firms, which is due to go live in Q1 2024.
There are four use cases in Phase Two:
During the Phase One, Ernst and Young (EY) were commissioned by the DSC to identify what conditions were required to achieve common data standards. The review involved a public consultation, interviews with stakeholders and research and analysis. The DSC reviewed EY's final report, which was published in April 2023, and issued five recommendations for the Bank and the FCA. The Bank and the FCA, in turn, published their response in August 2023, endorsing the majority of the recommendations. In summary, they have agreed that:
Prior to making any commitments on the timeframe for implementing these regulatory action points, the Bank and the FCA have said that they will need to consider how this workstream will be funded and resourced. An update will be given in the next phase of the Programme in Q1 2024.
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