The Financial Conduct Authority has recently announced that it will be looking to improve the Gabriel regulatory reporting system.
This should be welcomed; however, any changes to the system need to provide tangible benefits to the thousands of small companies that use it, as well as large ones and the regulator itself.
In a recent speech, Christopher Woolard, the executive director of strategy and competition at the FCA, neatly summed up the overall objectives when he said: “We want to explore not only how technology can drive new products, services and firms in consumers’ interests, but also what it can do to reduce the compliance burden of existing ones and make them more effective.”
The changes to Gabriel are just one part of the FCA’s increasing focus on technology to deliver improvements throughout the financial services industry.
- The FCA has announced it will be be looking at replacing the Gabriel reporting system
- A digital solution could allow the FCA to pull regulatory information from advisers’ databases
- The costs for small companies of the new system could be extensive
For example, the FCA is hoping to use artificial intelligence as part of its supervisory activities, including the automated monitoring of patterns of transactions that may be suspicious.
Clearly, these changes and the efficiencies they will deliver are also designed to save significant costs for both the FCA and the bodies it regulates.
Focusing on the changes to regulatory reporting, the FCA set up a pilot in 2018 involving a handful of the largest banks and investment bodies to explore how companies and regulators could use technology to make regulatory reporting more accurate, efficient and consistent.
The second phase of the pilot is now under way, with a focus on the types of regulatory reports that may be suitable for a digital regulatory reporting (DRR) solution.
In essence, the end game is that DRR could allow the FCA to pull regulatory reporting data directly from companies’ databases.
This would remove the need for companies to interpret regulation to understand what data needs to be gathered; which often leads to inconsistent interpretation by companies and incomparable data.
While this project is still in its infancy, the FCA’s recent request for comments on Gabriel is one of the first formal opportunities that smaller companies will have had to give feedback and ideas on how regulatory reporting could be changed for the better.
However, we need to bear in mind that the feedback the FCA is requesting relates to the usability and functionality of the system rather than the scope of information requested.
More information wanted
The FCA has made it clear that, in an ever-developing regulatory environment, the amount of information that it needs to gather is likely to increase rather than reduce and the information they gather now is necessary to confirm compliance with regulation.
For most small companies, the Retail Mediation Activities Return is the main supervisory tool the FCA uses to ensure that key requirements are being met.