07 January 2020

FCA and Bank of England announce proposals for data reforms across the UK financial sector

The FCA’s 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.

The Bank of England has published a Discussion Paper (DP), “Transforming data collection from the UK financial sector”, to improve the timeliness and effectiveness of data collection from firms across the financial system. Written responses to the discussion paper should reach the Bank by 7 April 2020.

The Bank’s DP marks the first step of a review announced in its response to Huw van Steenis’ Future of Finance report, which recommended that the Bank develop a new digital data strategy. The DP sets out the issues facing the current data collection system and identifies and explores a series of potential solutions, to prompt feedback from and further discussion with industry.

In addition, the FCA, the Bank of England and seven regulated firms have jointly published a Viability Assessment report on the latest Digital Regulatory Reporting (DRR) pilot. DRR will potentially allow firms to automatically supply data requested by the regulators, thereby reducing the cost of collection, improving data quality and reducing the burden of data supply on the industry. This document covers an assessment of the technological and economic factors that may impact a shift towards more automation in regulatory reporting. Following this report, the Bank of England and FCA have committed to continue to work together to:

• explore joint work on common data standards;
• commission a joint review of the legal implications of writing reporting instructions as code;
• commission a joint independent review of some of technical solutions explored as part of the Digital Regulatory Reporting (DRR) pilot, and
• collaborate closely while engaging with industry and planning future phases.

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