The Chartered Insurance Institute (CII) does not seem entirely sold on the data reform plans put forward recently by the Financial Conduct Authority (FCA) and the Bank of England (BoE).
“It is vital that the regulator has the right data to inform rules but data alone isn’t enough to prevent future consumer detriment,” asserted CII’s managing director of engagement Keith Richards following announcements outlining proposals for data reforms across the UK financial sector.
“It is vital data is accompanied by human insight to ensure developments in the market are thoroughly understood. Digital breadcrumbs can’t replace the knowledge gained by speaking to those who assist consumers.”
The FCA, in particular, aims to become a highly data-driven regulator and has unveiled its increased focus on the use of advanced analytics and automation techniques to deepen its understanding of how markets function. The goal is to enable the watchdog to efficiently predict, monitor, and respond to company and market issues.
In addition, it’s been announced that the regulator will be pursuing what it called a “broader transformation” by investing not only in new technology but also in skills and new ways of working to allow the FCA to better understand and use data and innovative technology.
The BoE, meanwhile, has published a discussion paper on transforming data collection from the financial sector – marking the launch of a review in consultation with banks, insurers, and financial market infrastructures to explore changing the hosting and use of regulatory data over the next decade.
Richards, however, has issued a warning in relation to how data is collected.
“There is a danger that a desire to streamline data collection might mean that different assets might be treated as the same, simply to create large ‘buckets’ for counting in a standardised way across the sector,” he stated. “This, in turn, might lead to an oversimplified view of the market.
“I am pleased the regulator will work with firms to ensure data collection is less burdensome. The regulator needs to ensure the market understands how this information will be used.”