The City-watchdog has pledged to transform the way it regulates the industry by improving its use of the data it collects.
In an overhauled data strategy published today (January 7) the Financial Conduct Authority said it wanted to be “smarter” in the way it used its data and advanced analytics to better understand the firms it regulates and trends in the market, which in turn would "transform the way it regulates and reduce the burden on firms".
Its objective is to deliver “real change” over the next five years. The FCA plans to exploit its data work throughout every division as well as change its culture and environment to provide training for all employees to use data effectively.
An FCA data operating model will be created and the regulator also plans to improve its existing central data services, launch data management and analytical tools and create in-house technology platforms.
This will be done alongside a new data entry system for advisers which will replace the current Gabriel system and an effort to digitise parts of the FCA handbook.
The FCA said it was making the changes due to advances in technology and improvements in data analytics, and that it was regulating an ever increasing number of firms many of which were using advanced data techniques.
Christopher Woolard, executive director of strategy and competition at the FCA, said: “Advances in technology are changing the nature of the firms and markets we regulate.
"Our data strategy provides a clear path for us to ensure we have the necessary skills and processes in place to remain at the forefront of this change.
“In keeping with our mission, 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.”
Over the next 12 months, the FCA will focus on increasing its data science work, improving the flow and quality of the data it collects and looking at how technology can change the interaction between the watchdog and the firms it regulates.
Through the changes, the regulator hopes to deepen its understanding of markets and consumers so it can simulate policy outcomes and identify more easily where it needs to intervene.
In particular the watchdog said the improved use of data would help it review historical data to learn lessons for the future, use intelligence to better understand harm and manage it more swiftly, improve predictive analytics to spot patterns and trends, and share data more effectively.
Meanwhile the Bank of England has published a discussion paper to improve the timeliness and effectiveness of data collection from firms across the financial system.
The paper marks the first step of a review announced in the Bank's response to Huw van Steenis’ Future of Finance report, which recommended that it develop a new digital data strategy.