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FCA Sets Out Next Stages of Data Strategy

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The Financial Conduct Authority (FCA) is advancing its data strategy after publishing an update in 2020, which set out a five-year plan designed to make the FCA smarter in its use of data and analytics. It has also established a joint programme with the Bank of England to transform how it regulates, with the aim of ensuring regulators get the data they need at the lowest cost to industry.

The initial focus of the FCA’s data strategy included increasing data science resources, developing data and analytics skills, and deploying new analytics tools. The strategy also implemented a new data collection platform, RegData, which replaced Gabriel and went live in 2021.

Fast forward to 2023, and following an investment of over £130 million in the strategy, Lauren Dixon, senior manager of data collection at the FCA, presented an outline of the authority’s data strategy at A-Team Group’s recent Data Management Summit London, and discussed changes being explored and delivered as part of Transforming Data Collection.

Approach

The data strategy was approached in a holistic way, considering what transitions needed to be made to make the FCA a ‘fit for the future’ regulator, and looking at all elements of what makes up a data strategy from governance and tooling to people and culture. Ahead of defining the strategy, the team spent time talking to people within the organisation about common pain points around data, which included data access, quality, management and use.

To address these pain points, the FCA built strong foundations that could deliver core elements such as data collection, which was moved to the cloud. It also deployed new data management and analytics tools and services across governance, quality, sourcing and sharing. Along with this, a new data catalogue was delivered, and more data analysts and scientists were recruited to drive product development and innovation.

Mindset

The mindset was to think big, start small, and scale, said Dixon. A focus on preventing consumer harm has employed innovative initiatives such as reviewing financial promotions using natural language processing (NLP) to analyse open source information and identify authorised and unauthorised financial advertising promotions that are not appropriate. Using the new tooling, it has become possible to scan around 100,000 websites a day. As a result, in relation to authorised firms, in 2022 8,582 promotions were amended or withdrawn, an increase of 1398% on 573 in 2021.

In its drive to use new techniques and become more efficient as a regulator, the FCA has also developed sanctions screening tools as a result of the Ukraine Russia situation, and is looking at how it can use synthetic data in anti-money laundering.

Transforming Data Collection

Data collection is high on the agenda, with the FCA working collaboratively with about 60 firms to disrupt and innovate. As part of the programme it has interviewed around 200 firms during the past 18 months to find out what is not working well in terms of data collection. This is part of a joint programme with the Bank of England and industry to collect data that is needed, but at the lowest cost to the industry.

The programme has three objectives:

  • Integrating reporting to increase consistency in designing and delivering collections for value, reuse, and efficiency
  • Modernising reporting instructions to improve how data is interpreted and implemented by firms
  • Defining and adopting common data standards that identify and describe data in a consistent way, and are open and accessible for use by everyone.

Following the user research, the team is now working on how to deliver the improvements and capabilities required, with a Town Hall event and communication on achievements expected in July 2023.

Firm portal

Options for a single firm portal are being considered to resolve the problem of firms reporting into multiple systems and improve the user experience. The FCA is also in the early stages of building a ‘firm view at a glance’ proof of concept designed to help firms visualise their own position in terms of submitting data. An initial PoC showing financial resilience survey data is due to be tested with firm users shortly. Finally, intuitive form design is in the making to provide user friendly and easy to submit forms, with an improved consumer credit form (CCR007) going live in January 2023.

Innovation

To be the best regulator it can be, the FCA is fostering innovation internally. Dixon described the FCA Ideas Lab, to which over 100 ideas were submitted, one of which led to the use of NLP to get key themes and a sense of sentiment from the thousands of consultation responses the authority receives every year.

It also continues to innovate externally, and will kick off a tech sprint later this year that will look at working with international regulators to answer the question on how AI and machine learning could enable regulators and supervisors verify that ESG product claims made to retail consumers are accurate and complete.

For more information on any of the topics above please visit the FCA website or check the Transforming Data Collection webpages.

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