FCA Business Plan 2021/22 – A Tech Focused Business Plan

Julie Pardy

Julie Pardy

With more than 30 years service in the Financial Services industry Julie has spent many years at the coal face undertaking a wide variety of roles in banking from Compliance to Sales, Operations to Training.

The hotly anticipated FCA Business Plan 2021/22 was finally published on the FCA website on the 15th July 2021. Having been delayed by more than three months, myself and the Worksmart team were keen to see what is in store for the coming months/years.

It’s hard to think that Nikhil Rathi has been CEO of the FCA since the last quarter of 2020 but after looking at the “Our Role” section of the Business Plan, you can see that he and his team have been steadily focussed on strategic planning for the next few years.

Sometimes when you have waited a long time for something you end up being disappointed, but this one was somewhat different to that which we had seen before. Introspective and with clarity over what changes will be made by the FCA as it attempts the transformation programme that every market participant will know is overdue.

For this blog I don’t intend to focus on those consumer, market and other priorities identified by the FCA. So, you might say, what’s the point of the blog then! My counter to that would be I want to draw out some salient points about the FCA, (which I think are equally important), what they are doing in their transformation programme, and how we might consider this in terms of what that might mean to regulated firms. 

Nikhil Rathi quote

Firstly, the FCA talked about having ear-marked £120 Million for their data transformation. Sounds like an awful lot of money might be the first observation. But in the context of what they do and the markets they serve, it really isn’t. We know that the FCA supervise more than 50,000 firms in the UK from a conduct perspective. A little-known fact is that they also supervise more than 18,000 firms from a prudential perspective.

The last time I Iooked at the SUP section of the FCA’s handbook, there were more than 20 regulatory reports that could be required from a firm (permissions dependent), and in each of those reports there are a multitude of individual data items to be reported against.

Any individual who has tried to interact with the old regulatory reporting tools from the FCA will know that they leave a lot to be desired. We only have to look at the most recent reporting templates for Directory Data to know that from a tech perspective, the FCA are most definitely not operating in the 21st Century.
Some people might give that paragraph the “so what” treatment, but by reading between the lines and putting that together with the changes that are currently underway in Stratford, then the picture becomes clearer.

• A regulator with a budget of approx. £600 Million to spend on supervising a market of approximately 60,000 firms. All of which are different shapes and sizes with many different business models and regulatory permissions.

• £120 Million ear marked to deliver their 3-year data strategy and data automation vision

• The building of a “Data Science Unit” staffed by clever mathematicians that will use increasingly complex data collection to analysis, assess and predict firms that need more attention than others

Add this to recent research that Worksmart undertook that indicated that approximately 68% of those individuals surveyed worked for a firm that either has no formal tech budget themselves or tends to choose to only build tech internally and never benefit from market expertise and investment.   It suggests to us that firms might want to “Get with the programme.”  A little harsh maybe but think about it like this – the FCA is increasingly interested in firms actively understanding and managing not only their financial resilience, but also their operational resilience, conduct risks, diversity and inclusion and culture to name but a few.  Now we know that firms take their regulatory responsibilities seriously and do indeed work hard to manage all of these areas, what I can also say with confidence is that firms will not be able to manage increasingly complex regulatory requirements if they are not tech enabled. 

I know as I write this it is from my position as a Director of a RegTech firm, so naturally I’m going to recommend that firms need to be tech enabled.   Even if I wasn’t, surely reading between the lines we can see that firms will be increasingly managed from a regulatory perspective via data.   For portfolio supervised firms you already are more often than not!   And that surely means only one thing – RegTech should surely be on everyone’s radar.  It can transform firm’s risk and people management operations overnight, sometimes for quite a small initial investment. 

Doubtful?  Cynical even? Let’s see if we can give you a different way of thinking about people and process management.  Reach out to our friendly and knowledgeable team on: 01908 613613 or email us at: today and let us show you how we can transform your people and process management by utilising RegTech.

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