Bank of England and FCA deliver on phase one commitments

  • Update
  • 6 July 2023


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The Bank of England and FCA deliver on their phase one commitments

Abstract 2

The Bank of England (the Bank) and the Financial Conduct Authority (FCA) are working together with industry to transform data collection from the UK financial sector. We are doing this through a joint transformation programme. In this publication we provide an update on the joint transformation programme since our last communication in March 2023 including updates on:

  • the delivery of the phase one recommendations;
  • the progress of the phase two use cases;
  • the Data Standards Review;
  • the future of Transforming Data Collection; and
  • our forthcoming Town Hall event on Thursday 13 July.

Transforming Data Collection

The Transforming Data Collection (TDC) joint transformation programme launched in July 2021. At that time, we committed to delivering tangible change in two years, setting the foundations for larger transformations to follow.

Today we are delighted to confirm that we have met our commitments in delivering on our phase one recommendations by July 2023. In doing so we have delivered benefits to ourselves and firms.

Looking to the future, we are excited about the potential of the emerging phase two recommendations from phase two. At the same time, our 2031 target state and associated transformation roadmap is taking shape.

Transforming Data Collection is going to be a continuous journey, but we remain committed to delivering our vision.

Delivery of the phase one recommendations

At the end of our phase one discovery and design work, the joint transformation programme made recommendations for the Quarterly Derivatives statistical return (Form DQ) and Financial Resilience Survey (FRS). The Bank and the FCA responded agreeing to take forward seven solution recommendations.

Over the last year, the Bank and FCA programme teams have been working to develop and deliver the recommendations. During this time, we have tested prototypes with users to validate our solution designs. For some of the recommendations, these insights have led us to explore how the solutions can be designed to tackle wider issues being experienced for data collection.

An update on the delivery of each of the recommendations can be found in our publication from July 2023


How TDC lessons are changing Bank and FCA process for designing firm collections

Over the last two years of discovery, both the Bank and FCA have strong evidence to show how data collection design can be improved. We are now implementing these new processes across our organisations which includes changes such as:

  • more rigorous research with firms ahead of designing new collections to understand how data is currently captured,
  • testing new designs with firms earlier in the process and before consultation,
  • being clearer about why the data is being collected and what it will be used for,
  • issuing plain language guidance that can be easily accessed,
  • ensuring forms are designed taking account of firm behaviour to simplify and improve the experience. This includes aspects such as contextual guidance being provided as a firm is populating the form.

Update on phase two

The programme has made good progress since our last update in March. All use cases are now in the design stage with the exception of Incident, Outsourcing and Third Party Reporting (IOREP) which is in the discovery stage.

Below is an update on each of the phase two use cases.

Retail Banking Business Model Data (RBBMD)

Every 2-3 years, the FCA collects data which relates to retail bank’s business models in order to carry out an assessment of competition in the market. The ad hoc data collection which is sent to firms includes around 2,500 data points and the findings are published on the FCA website. The programme team are exploring ways to collect the data from firms which:

  • reduces burden on firms and improves efficiency of the collection process,
  • improves data quality at source reducing errors, time spent checking data and asking firms to resubmit
  • increases the capacity of competition to deliver value-adding work,
  • increases trust and confidence with firms for ad-hoc collections.

A range of potential prototypes are being tested with end users within the FCA and firms. This testing enables the team to assess the value of the potential solutions which informs further design work and prototype iterations. We believe the solutions developed may also be applicable for the Bank of England in future.

We expect to publish the use case recommendations and regulator response in Q4 2023.

Strategic Review of Prudential Data Collection (SRPDC)

For our review of prudential data collection from solo regulated firms, our discovery findings led to a focus on two hypotheses:

  1. By ensuring a shared understanding of what prudential data the FCA needs to fulfil its mission and how it will use that data, the FCA will reduce the reporting burden on firms and itself.
  2. By providing solo-regulated firms with simpler, clearer guidance and better data validation at the point of data entry, the FCA will improve the quality, accuracy and timeliness of the reporting data those firms submit.

The alpha phase has sought to test these hypotheses, focussing on the data which informs the prudential/financial section of the Single View of Firms (SVOF) dashboard (an interface which helps our frontline staff make more rapid and holistic firm assessments).

Through user research, the team have gained an understanding of how the data is used by the FCA and the pain points firms have with the current submission process. The insights from the research enabled us to identify potential opportunities for improving the quality of the data and develop an initial proof of concept prototype of simpler and more intuitive ways for firms to submit prudential data to the FCA. 

Ongoing research and usability tests have informed iterations to the prototype, whilst further research and a co-design workshop with both FCA and industry participants will inform future versions.

We expect to publish the use case recommendations and regulator response in Q3 2023.

Commercial Real Estate (CRE) data

Commercial Real Estate (CRE) data is crucial for the Bank's ability to monitor prudential risk in the financial sector. Work on the use case during phase one confirmed our initial hypothesis about CRE data: it’s crucially important data, but the current data we get is a poor fit for our needs, fragmented, and burdensome to collect.

During phase two, the programme team initially identified a set of ten potential solutions for the CRE use case. Positive feedback has been received from both of the programmes industry committees on these solutions. Seven of the potential solutions were moved into a design phase.

Taking both the complexity of the solutions and the available resource into consideration, the programme team has decided to take forward three solutions to the recommendation stage:

  • Data model - a structured representation of types of data and how they relate to each other within a particular domain
  • Instruction clarification - a public-facing resource where the user is able to understand and gain clarity on the instructions
  • End to end data quality management - an end-to-end service which remedies data quality issues for Bank users, and provides clarity to firm users on the quality of their submission

Throughout the discovery and design stage, the team have been conducting user research with firms. The insights gathered have informed the work for the use case and is helping us to develop a capability that we may be used more widely to support the design of data collections in future.

The programme team have been developing prototypes for the potential solutions and testing them with users. The feedback received is helping the team to refine the products and understand what is achievable.

We expect to publish the use case recommendations and regulator response in Q4 2023.

Incident, Outsourcing and Third Party Reporting (IOREP)

Ensuring the operational resilience of the financial sector is a key priority for the Bank of England, PRA and FCA. However, operational resilience is currently an area where the regulators lack high quality consistent data. 

Policy makers are considering the development of new incident, outsourcing and third party reporting policies. You can find more information about the operational resilience policy on PS6/21 | CP29/19 | DP1/18 Operational Resilience: Impact tolerances for important business services

By considering the design of this reporting policy as part of the joint transformation programme, we can help ensure this critical data is delivered in a way that minimises the impact on firms. At the same time, we think the use case will provide a chance to explore how best to deliver ‘event’ driven collections, where a new report is triggered when a given event occurs.

The Incident, Outsourcing and Third Party Reporting (IOREP) use case has now completed a period of discovery. The team have been conducting research interviews with end users and technical experts from the Bank, FCA and industry to gather insight into the issues faced by IOREP users. A report has been created summarising the key findings from this comprehensive research.

The team are now moving into the design stage. The key findings report will help to better inform the team’s design work for the use case.

We expect to publish the use case recommendations and regulator response in Q4 2023.

Data Standards Review

During phase one of the programme, the Data Standards Committee (DSC) commissioned a third-party review on the topic of data standards in financial services. The review aimed to identify the necessary conditions for achieving greater development and adoption of standards. The review was carried out by Ernst and Young (EY) and consisted of a public consultation exercise, interviews with relevant stakeholders and further research and analysis.

EY have completed their review and produced a report setting out the conclusions from their analysis and proposed next steps in this area.

The DSC have reviewed the final report from EY and reflected on its conclusions. In their role as the TDC programme’s industry forum in this area, the DSC has written a set of recommendations to the Bank and the FCA - focusing on the recommendations covered by the report’s conclusions.

The Bank and the FCA are considering the recommendations from the DSC. They are currently in the process of writing a response, outlining the actions they will take to address each of the DSC recommendations.

The full report, DSC recommendations and joint response from the Bank and FCA will be published to the TDC webpage by the end of July 2023.

Ahead of the publication of the full EY report, a summary of the report’s key themes is below.

  • Regulators and industry agree that there would be common benefit from greater development and adoption of data standards, provided that these are aligned to our objectives.
  • Data standards take many forms and serve many purposes, making this an area that is only broadly defined, with a very wide scope.
  • Given that various international and national bodies have responsibilities for standards, it is important that a coordinated approach is taken to their development and adoption.
  • Regulators need to continue to further develop a structured approach to data standards, with formal governance structures and processes for adoption of standards.
  • Industry would like to leverage and maximise adoption of existing standards that they see as beneficial, and avoid the risk of duplicating these in new standards work.

Digital Regulatory Reporting 2023 update

In 2020 the Bank, FCA and seven large reporting firms commissioned a report on Digital Regulatory Reporting (DRR). The recommendations in part led to the establishment of the TDC joint transformation programme. 

Earlier this year, we instructed PA Consulting to produce a short update to the 2020 report and to reflect on other regulatory DRR initiatives. As part of this, the report assessed five global initiatives and compared their approaches which led to six key findings.

The report reemphasised the importance of cross Industry collaboration, which has been a core part of TDC. The report highlighted the importance of Common data standards and their associated models to any DRR initiative.

You can read the full report here.

The joint transformation programme aims to take these findings, and the Data Standards review recommendations and response, to set out its next steps on data standards.

Future of Transforming Data Collection

The last two years have been a valuable exercise for us and firms. We have learnt a lot, delivered tangible value, and have a number of solutions that we are now taking forward to develop and scale.

TDC and the joint transformation programme is entering a new phase for both the Bank and FCA. In this new phase we will be prioritising implementation and transformation over learning and incremental delivery.

We will carry out this work as part of a refreshed strategy for transforming data collection we will look to publish in Q1 2024.

Town Hall

On Thursday 13 July, the joint transformation programme will be hosting a Town Hall at the Bank of England. In the first part of the event, our senior leadership team will provide an update on the progress of the programme. They will be showcasing the benefits that have been realised and delivered so far, and sharing our future plans for TDC. During this section there will be an opportunity to ask questions and provide feedback on the programme and on any of the information you have heard.

This first part of the event will be hybrid giving attendees the opportunity to attend both in person and online.

The second part of the event will be a showcase and networking session with refreshments. Attendees will have the opportunity to see the outcomes of the work that is being carried out, engage with the TDC senior leadership team and network with other TDC stakeholders that are engaged with the programme.

Additionally, we will be showcasing some of the wider TDC initiatives taking place at both the Bank and the FCA, and sharing further information about the future of the programme. Input from industry is key to the programme’s success and there will be opportunities to provide feedback during this session.

The second part of the event will be in person only.

We would encourage you to attend the event in person if you can, and pass on the invitation to any relevant colleagues. The programme wouldn’t be possible without the participation and input from industry. It is important to us that you have this opportunity to have your say on the programme, the work we are doing and our plans for the future.