FCA to move forward on digital reporting

FCA to move forward on digital reporting

The Financial Conduct Authority has said it will press ahead with its plans to use technology to make it easier for firms to meet their regulatory reporting requirements.

Following a consultation earlier this year, the regulator has concluded the use of digital regulatory reporting could have benefits and plans to publish a technical paper on it early next year.

The FCA said: "Every firm we regulate is required to send us data via regulatory reports, but some can find it difficult to meet these obligations. Many firms tell us it takes them significant effort to navigate and interpret our handbook, necessitating expenditure and reliance on external professional services to understand what information we need and when.

"Firms then implement and codify these interpretations into their in-house regulatory reporting systems. Most firms do this manually, creating the risk of different interpretations and inconsistent reporting.

"We wanted to explore how we could use technology to make the current system of regulatory reporting more accurate, efficient and consistent. We particularly wanted to find ways to make our reporting rules less reliant on human interpretation and implementation."

Most of those who responded to the FCA's consultation agreed there were significant potential benefits to be gained by the introduction of digital regulatory reporting, particularly through increasing efficiency.

But some warned the cost of implementing it might outweigh the benefits and some said it would be difficult to achieve for firms that store data in multiple legacy systems and in differing formats.

There were also concerns that digital regulatory reporting would be disproportionately beneficial for larger firms.

In response the FCA said: "We are conscious of understanding the potential benefits or otherwise for smaller firms, and have engaged with bodies such as the Smaller Business Practitioners Panel to gain a fuller insight.

"Our investigative work is at an early stage. If we decide to move toward a [digital regulatory reporting] regime, an appropriate consultation process and cost benefit analysis would be conducted to ensure that it would not result in a disproportionate cost for the firms that we regulate."

In addition to the consultation, the FCA has also been working with the Bank of England on a six-month pilot to evaluate the feasibility of expanding digital reporting by testing it with two different scenarios.

The pilot is expected to end in November and a technical paper will then be published in the first quarter of 2019 which will assess the technologies used.

Martin Dodd, a financial adviser with the Midlands Investment Agency, said: "Making regulatory reporting easier is definitely a good idea in that it is not easy for smaller firms that have not got a dedicated department that's going to be dealing with it.

"Certainly if they can make it easier for not only smaller firms but all firms they will get more accurate information."