Transforming data collection – Data Standards Review with recommendations and Bank of England and FCA response

Published on 01 August 2023

Overview

The Bank of England (the Bank) and the Financial Conduct Authority (FCA) are leading a joint transformation programme with industry to transform data collection from the UK financial sector. The programme’s vision is that 'regulators get the data they need to fulfil their mission, at the lowest possible cost to industry'. One of the programme’s key reforms, central to achieving this vision, is the increased development and adoption of common data standards throughout the financial sector.

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.

More information about the Data Standards Review and how industry were able to participate can be found in our October 2022 publication.

Report and recommendations

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

The DSC 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 produced a set of recommendations for the Bank and the FCA that focused on the proposals covered by the report’s conclusions.

Response to recommendations

The Bank and the FCA today published their response to the recommendations.

The joint response represents the views of the Bank and the FCA. They have agreed to accept most of the recommendations set out by the DSC and will work collaboratively with the programme to identify ways to take these forward.

The below table summarises the key findings and proposals from the review, the recommendations from the DSC and the authorities' responses.

The Bank and the FCA need to consider how this work will be funded and resourced before making any commitments on timelines. An update will be provided on the scope and timelines in the next phase of our joint transformation programme in Q1 2024.

NB The Bank and FCA response includes renaming the Data Standards Committee to the Industry Data Standards Committee (IDSC) - this name is used below.

Review findings / proposals	Data Standards Committee recommendations	Bank and FCA response
All parties recognise a broad range of financial services data standards benefits including improved data quality, support for innovation, data and standard reuse or extension Definitions of data standards and metrics to measure their impact and benefits are foundations for data standards Benefits will clearly be optimised when implemented across regulations and by a cross-sector network of firms, but this requires an appropriate support mechanism to deliver and should not be expected to happen organically	Taxonomy Adopt a taxonomy for the regulatory reporting space as a key initial output. Metrics Develop a set of metrics around data standards, potentially with support from a third party.	Taxonomy We agree that there is a need to create a taxonomy of financial data standards to classify and describe the standards currently used in regulatory and other data collection by the Bank, PRA and FCA. Metrics As part of the next phase of the joint transformation programme, we will work with the IDSC to advise on the development of a framework to measure the costs and benefits arising from the development and adoption of data standards and to measure the extent of adoption.
A formal process to manage standards – existing and new, review, development, extension and retirement – should be agreed An industry representative committee should support this management Roles and responsibilities must be clearly defined for this process and committee	Industry Data Standards Committee A formal Data Standards Committee (Noted in the regulator response as the Industry Data Standards Committee, or IDSC) should be established to provide ongoing recommendations regarding the use of data standards for regulatory financial data collections to the Bank of England & the Financial Conduct Authority. Role of the authorities Authorities should: Be full members of the IDSC. ‘Mandate’ the adoption of standards recommended by the IDSC by incorporating them into regulatory financial data collection requirements.	Industry Data Standards Committee We agree in principle that: The UK needs a standing committee of industry experts with a remit to advise on the use of data standards for reporting to UK financial authorities (including regulatory, statistical and other reporting). The Industry Data Standards Committee's remit should be to evaluate, select and advise on the use of existing standards, if available, and recommend the development of new standards where existing standards are not adequate. (The new Industry Data Standards Committee should not itself develop new standards.) We will work with the current DSC and new IDSC to develop updated Terms of Reference for the Committee in line with the above remit. We intend for these new Terms of Reference to apply from Q1 2024. Role of the authorities The authorities should serve on the committee as observers to ensure clear distinction between the regulatory view and the views of industry. The Bank and FCA accepted (above) the Committee’s recommendation that its remit should concern adoption of existing data standards for use, because of the potential benefit of applying data standards to data used for regulatory and other reporting to authorities. If the IDSC were to recommend that the industry adopt certain data standards, these would not automatically become regulatory requirements – this would only happen if the authorities formally decided to make them requirements. Authorities can and should require the mandatory adoption of data standards where there is a clear public policy case for doing so, in line with statutory objectives (and where appropriate for the Bank, its other legal rights and responsibilities). Any mandate would need to follow statutory requirements on making rules. Alongside mandating standards, authorities have a range of softer tools available to us to promote the use of standards, such as publishing a roadmap and committing to the use of certain standards in the future.
New standards, where appropriate, should build upon existing internationally accepted standards Implementation should always begin with an agile and iterative development approach with representative parties to work through a consistent set of development steps that validates the viability of the new or revised standard A clearly defined implementation roadmap should be maintained providing sufficient time for firms and regulators to prepare	Roadmap Produce a suggested roadmap which sets out long-range strategic goals for recommending data standards that help simplify and standardise all regulatory financial data collections in the UK. This should include the creation of an inventory of regulatory financial data collections and their associated data elements.	Roadmap The authorities will publish a roadmap for simplifying and standardising regulatory and other data collection by the Bank, PRA and FCA. We will create an inventory of UK reporting elements. We agree this inventory should serve as a tool to help identify gaps and inconsistencies in standards adoption.

Review findings / proposals

Data Standards Committee recommendations

Bank and FCA response

All parties recognise a broad range of financial services data standards benefits including improved data quality, support for innovation, data and standard reuse or extension
Definitions of data standards and metrics to measure their impact and benefits are foundations for data standards
Benefits will clearly be optimised when implemented across regulations and by a cross-sector network of firms, but this requires an appropriate support mechanism to deliver and should not be expected to happen organically

Taxonomy

Adopt a taxonomy for the regulatory reporting space as a key initial output.

Metrics

Develop a set of metrics around data standards, potentially with support from a third party.

Taxonomy

We agree that there is a need to create a taxonomy of financial data standards to classify and describe the standards currently used in regulatory and other data collection by the Bank, PRA and FCA.

Metrics

As part of the next phase of the joint transformation programme, we will work with the IDSC to advise on the development of a framework to measure the costs and benefits arising from the development and adoption of data standards and to measure the extent of adoption.

A formal process to manage standards – existing and new, review,
development, extension and retirement – should be agreed
An industry representative committee should support this management
Roles and responsibilities must be clearly defined for this process and committee

Industry Data Standards Committee

A formal Data Standards Committee (Noted in the regulator response as the Industry Data Standards Committee, or IDSC) should be established to provide ongoing recommendations regarding the use of data standards for regulatory financial data collections to the Bank of England & the Financial Conduct Authority.

Role of the authorities

Authorities should:

Be full members of the IDSC.
‘Mandate’ the adoption of standards recommended by the IDSC by incorporating them into regulatory financial data collection requirements.

Industry Data Standards Committee

We agree in principle that:

The UK needs a standing committee of industry experts with a remit to advise on the use of data standards for reporting to UK financial authorities (including regulatory, statistical and other reporting).
The Industry Data Standards Committee's remit should be to evaluate, select and advise on the use of existing standards, if available, and recommend the development of new standards where existing standards are not adequate. (The new Industry Data Standards Committee should not itself develop new standards.)

We will work with the current DSC and new IDSC to develop updated Terms of Reference for the Committee in line with the above remit. We intend for these new Terms of Reference to apply from Q1 2024.

Role of the authorities

The authorities should serve on the committee as observers to ensure clear distinction between the regulatory view and the views of industry.
The Bank and FCA accepted (above) the Committee’s recommendation that its remit should concern adoption of existing data standards for use, because of the potential benefit of applying data standards to data used for regulatory and other reporting to authorities.
If the IDSC were to recommend that the industry adopt certain data standards, these would not automatically become regulatory requirements – this would only happen if the authorities formally decided to make them requirements.
Authorities can and should require the mandatory adoption of data standards where there is a clear public policy case for doing so, in line with statutory objectives (and where appropriate for the Bank, its other legal rights and responsibilities). Any mandate would need to follow statutory requirements on making rules.
Alongside mandating standards, authorities have a range of softer tools available to us to promote the use of standards, such as publishing a roadmap and committing to the use of certain standards in the future.

New standards, where appropriate, should build upon existing internationally accepted standards
Implementation should always begin with an agile and iterative development approach with representative parties to work through a consistent set of development steps that validates the viability of the new or revised standard
A clearly defined implementation roadmap should be maintained providing sufficient time for firms and regulators to prepare

Roadmap

Produce a suggested roadmap which sets out long-range strategic goals for recommending data standards that help simplify and standardise all regulatory financial data collections in the UK. This should include the creation of an inventory of regulatory financial data collections and their associated data elements.

Roadmap

The authorities will publish a roadmap for simplifying and standardising regulatory and other data collection by the Bank, PRA and FCA.
We will create an inventory of UK reporting elements. We agree this inventory should serve as a tool to help identify gaps and inconsistencies in standards adoption.