Joint transformation programme update
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 communication we provide an update on the joint transformation programme including the start of phase two and the new use cases, and the plans for taking forward the recommendations for the phase one use cases.
Phase two of the joint transformation programme began on Thursday 22 September. We hosted an in person event for all the members of our Core Delivery team and Advisory Group. The event provided an opportunity for our members to meet those that they will be working with face to face and have an introduction to the programme.
Use cases in scope
During phase two, the joint transformation programme will focus on a new set of use cases. The new use cases for phase two of the programme are:
Incident, Outsourcing and Third Party reporting (OATP) - 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.
Commercial Real Estate (CRE) database - A phase one use case, getting hold of good quality commercial real estate 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. We think completing the design of an integrated ‘transformed’ commercial real estate collection is a critical stepping stone to the delivery of future use cases, for instance a consolidated loan collection.
Review Prudential Data Collection - For a prudential regulator, the prudential data the PRA and FCA get from firms is typically some of the most important data they receive. High level capital, liquidity, balance sheet and profitability metrics are a key indicator for how close a firm is to failure. On the flipside, these metrics are some of the most costly for firms to produce. We therefore think improving collection of prudential data will be critical for Transforming Data Collection (TDC) to be successful, with lots of opportunities to deliver value to firms and regulators. We think this use case, looking at prudential data collections from solo regulated firms, will inform potential future work looking at prudential data from dual regulated firms.
Retail Banking Business Model Data - The FCA currently collect detailed product-level financial data across the range of retail banking products and segments. The data is critical to support the FCA’s competition objective and is reused by a variety of other stakeholders across the FCA. But the data is currently collected ‘ad-hoc’, and hasn’t been designed in an integrated way to best meet the needs of all of the users of the data. The FCA want to move the collection to a regular collection, and design a new integrated collection that minimises burden on firms. Further, designing the ‘retail banking business model’ implementation as part of TDC will allow us to explore the extent to which business model data can be standardised within a tight scope of relatively homogenous firms.
Change to scope
Initially the joint transformation programme had planned to have five use cases for phase two. Due to a lack of resources, the decision was taken to reduce the scope of the Asset Reporting for Insurers use case and to focus on the insurers CRE assets. This work will now be part of the CRE use case.
For each of the use cases, there will be a period for mobilisation followed by discovery and design stages. Mobilisation for the CRE and Review of Prudential Data Collection use cases started on the 26th September for a period of four weeks. This will be followed by discovery and design stages. The OATP and Retail Banking Business Model Data use cases mobilisation period will begin in Q4 2022 and as with our other two use cases, will be followed by discovery and design stages.
More detailed information regarding the timelines and plans for all of the use cases will be published in our November communications.
In order to work effectively with industry, the Bank and FCA have a governance and delivery framework in place for the joint transformation programme.
The work of the programme is carried out by two delivery groups: a Core Delivery Team and an Advisory Group. The programme is overseen by two committees: the Reporting Transformation Committee and the Data Standards Committee. Further information about the roles of the groups can be found in the Terms of Reference for the Governance and Delivery Groups.
Earlier this year we ran a nominations process for phase two of the programme. For this process, the programme asked for nominations for new committee members and re-nominations from existing committee members. As a result of this, both of the committees memberships have been refreshed with many members staying on from phase one, as well as new members joining for phase two.
The first meetings for both of the committees will take place in Q4 2022.
Data Standards Review
During phase one of the joint transformation programme, the Data Standards Committee commissioned a review of data standards. The review will be performed by Ernst and Young (EY), and they will submit their report to the Bank and FCA by the end of 2022. The review will look at the data standards landscape as a whole and answer a number of key questions relevant to increasing the development and adoption of common data standards.
The review will include an opportunity for industry to provide input on their views regarding data standards. Further information about this will be published on the Transforming Data Collection page soon.
Update on the phase one use cases
Earlier this year, the joint transformation programme made seven recommendations to the Bank and the FCA as a result of the work carried out during phase one. The recommendations are aimed to target a selection of issues that were identified for the phase one use cases: the Quarterly derivatives statistical return ‘Form DQ’ and the Financial Resilience Survey (FRS).
The Bank and FCA agreed to accept, in principle, all of the recommendations made by the joint transformation programmes industry committee. For some recommendations, the Bank and FCA are focused on delivering solutions immediately and are committed to delivering valuable change by June 2023.
For other recommendations, the joint transformation programme will need to explore the solutions further to understand how they might be delivered and the associated business case. The Bank and FCA will add these recommendations to their future roadmap for transformation if there is found to be a business case for them. The recommendations have not been prioritised as part of the joint transformation programmes use cases for phase two but will be considered when deciding future use cases.
The recommendations made by the programme, and the response from the Bank and FCA can be found in the July 2022 publication.
How to get involved
The joint transformation programme is working with industry in an open, collaborative and transparent way. This will ensure we have the widest possible set of views to get the best solutions to the issues we are tackling. There are still lots of opportunities to get involved.
If you would like to be involved or would like to find out more, please contact TDCSecretariat@bankofengland.co.uk
Future joint transformation programme communications and updates
The next update from the joint transformation programme will be in November. It will provide more details on the plans for phase two, the timelines for the discovery and design stages for each of the use cases, and provide information on the different ways that industry can be involved with the programme. As part of this update we will be hosting a Town Hall event to give stakeholders an opportunity to find out more information about the programme and ask any questions they may have.
You can find all communications from the joint transformation programme on the Transforming Data Collection page.