FCA pledges to overhaul system for requesting data from regulated companies

In outlining a new data strategy (click through for 16-page / 1.44MB PDF), the FCA admitted that previous regulator the Financial Services Authority (FSA) had not always requested data from businesses in "a clear and effective way" in the past.

"We have listened to the firms we regulate, who told us there are a number of failings, including: too many requests for data and information without a clear explanation about why it was needed; unreasonable timescales, resulting in firms needing to divert resources to meet our requests; [and] failure to communicate what the data and information was used for, leaving firms questioning if it was used at all," the FCA said.

"In addition to the concerns raised by firms, we recognise that the FSA: did not have appropriate internal governance to identify all the requests being made of firms to ensure the appropriateness of requests, consistency of communication and the re-use of data and information already gathered; [and] did not have all the necessary technology to fully exploit data and information throughout the lifecycle of collection, storage and use," it added. "This is the data and information legacy that we have inherited and we are committed to addressing it."

The FCA said it requests data from companies in a bid to understand the markets it is tasked with regulating. Financial services companies are also obliged under law to provide data to the FCA under certain circumstances. For example, under the EU Markets in Financial Instruments Directive (MiFID), financial services companies that outsource data processing activities are generally required to ensure that regulators have "effective access" to data for auditing purposes.

In future the FCA said that the data it collects will be "effectively governed and controlled" and "clearly specified". It said it would put review systems in place to ensure it stopped collecting data from businesses where "it no longer meets our needs".

"Our governance and controls will challenge any data collections that cannot show a clear link to our objectives and strategic priorities or to our obligations as an international regulator," it said. "Data requests will be clear and unambiguous in what is required of the provider and the format in which it should be supplied. Wherever possible we will use standard formats and technology to enable data collection."

The FCA said that it would ensure that the "regular data", such as information about complaints and product sales information, businesses would be asked to submit would be "fit for purpose", allowing it to "act or seek supplementary data where we identify a problem". It added that its views of the markets it regulates would be based on "rich ... baseline data".

Data collected will in future be "consolidated, catalogued, directed and accessed across the FCA" and the methods of collection will be easier and more flexible. It said that it would also manage and store data using "fit-for-purpose technology" that is, where possible, "up-to-date" and "off-the-shelf".

Data collection will be centrally co-ordinated by a new Data and Analysis Department (DAAD) within the FCA's Policy Risk and Research division. DAAD will be responsible for ensuring "there is appropriate challenge" of the requests for data made across the FCA and that they are "appropriately governed".

A new Information Governance Board will oversee and approve all new requests for regular data from regulated businesses from now, the FCA said. This should lead to "better engagement" with businesses about the nature and purpose of requests prior to formal requests being submitted and provide "more clarity on the data required".

The FCA said that it intends to test out its new data strategy by using the retail investment market as a "working example" of its new "data management model" by September 2014.

"Overall the proof of concept will test that: we can change the way we think about data for the FCA; we can identify and collect some baseline data for the FCA to better understand how the

UK Retail Investment Market is operating; we can deliver some of the enabling tools to access and use the data; we can design a repeatable approach for other sources of data and other markets," the FCA said.