The Financial Conduct Authority (FCA) and the Bank of England (BoE) have outlined new plans to develop their in-house data and analytics capabilities.
A transformation plan is at the heart of the FCA’s changes, with which it hopes to become a “highly data-driven regulator”.
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”.
“Advances in technology are changing the nature of the firms and markets we regulate,” says Christopher Woolard, executive director of strategy and competition at the FCA.
“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 BoE has released a discussion paper on the subject, focused on improving the timelines and effectiveness of data collection from firms “across the financial system.”
It is a first step for the regulator in a review announced in response to a report from Huw van Steenis, former senior advisor to Mark Carney, the previous governor of the BoE. It hopes that the discussion paper will “prompt feedback from and further discussion with the industry.”
Sam Woods, deputy governor for prudential regulation and CEO of the Prudential Regulation Authority (PRA), says: “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.”
The two regulators, alongside seven market participants, have also released a viability assessment into the latest pilot of Digital Regulatory Reporting (DRR), a scheme which would allow firms to automatically supply data requested by the regulators.
Read more: UK regulators take aim at banks’ IT failures