Transcript The Future of Regulatory Reporting

Financial Services Authority, UK
Integrated Regulatory Returns Programme
Presentation to:
9Th Annual XBRL Conference
Auckland, New Zealand
Wednesday 12th May 2004
Presented by David Anderson
Programme Director, Integrated Regulatory Returns
What I will cover today . . .
• Background
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to what we are doing
Introduction to the Financial Services Authority ?
How did the FSA come into being ?
The business need that was (and is) Electronic Submission ?
2001 to 2003 strategic ‘Data Needs’ initiative
The need for the FSA to be ‘Easier to do business with’
• Our Programme - Integrated Regulatory Returns
– IRR Programme Leadership
– The Why and the When but not yet How
– The Why and the When and finally the How
• What
have we (and our partners) learned so far
– Issues which quickly surfaced
– Lessons learned
– What we now regard as the ‘key steps toward success’
Background to what we are doing . . .
What is the Financial Services Authority ?
An independent non-governmental body given its statutory
powers by the Financial Services and Markets Act 2000. It
is a company limited by guarantee and financed by the UK’s
regulated financial services industry.
Currently regulates some 11,000+ firms in UK
Created from disparate set of regulators to become one of
only two ‘unitary’ regulators in the world. (With Sweden)
Background to what we are doing . . .
How did it come in to being ?
It amalgamated nine legacy regulators and their scope :
– Bank of England
– Building Societies Commission
– Insurance Directorate
– Friendly Societies Commission
– Securities & Futures Authority
– Personal Investments Authority
– Investment Managers Regulatory Organisation
– Securities & Investment Board
– Register of Friendly Societies
Banking & Markets
Building Societies
Insurance & Lloyds
Insurance
Wholesale Investments
Retail Investments
Asset Management
Oversight of three above
Credit Units
Came into being in 1999, employs some 2,300+ staff and
is based in Canary Wharf, London
Background to what we are doing . . .
The business need that was (and is) Electronic Submission ?
• Why Electronic Submission now ?
– Principally - the addition of regulating Mortgage & General
Insurance firms
– Resultant increase in firms regulated from 11,000 to 30,000+
• Implications of expanded remit :
– Processing of paper returns is time consuming and expensive
– Not realistic to increase fees to industry by up to 200%
– Manual processing does not leverage technology
– If manual, there are no efficiency or effectiveness improvements
Background to what we are doing . . .
• Other factors . . .
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Conclusions from two year internal ‘Data Needs’ review
Annual plan element for FSA to be ‘Easier to do business with’
Annual plan element for FSA to ‘Improve internal efficiencies’
Pending EU Accounting changes (IFRS, Basel II)
Financial Reporting Council responsible in the UK for
• Setting accounting and auditing standards
• Pro-actively enforcing and monitoring these standards
• Overseeing the self-regulatory professional bodies
• Run by ex COO of FSA – keen to look at IFRS & XBRL
Background to what we are doing . . .
The need to be ‘easier to do business with’
The concept of an Integrated Regulatory Return started to emerge . . .
Would include all the data we require from a firm carrying on any particular
combination of regulated activities on a regular basis and would . . .
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be aligned to a firms financial reporting period
be ‘de-duplicated’ or customised for each regulated firm
be only the information needed for regulatory risk assessment
submitted electronically on a mandatory basis
submitted only by web-browser or by system-to-system methods
be first used to support Mortgage & General Insurance Regulatory
returns from 1st July 2005. Remainder of regulated activities by 2007
IRR Programme Leadership . . .
Programme Vision:
“IRR Programme will facilitate better informed regulatory decision
making by defining and building a regulatory taxonomy as the basis
for implementing Mandatory Electronic Reporting (MER)”
Mission Statement:
“To meet and exceed our commitments to regulated firms, internal and
external stakeholders by delivering the systems, processes and capabilities
in support of the IRR Programme’s Vision”
Our Strategy:
Six work-streams focussing on internal and external stakeholder needs
– Delivery with quality and to set an example in Programme Governance
– An overall architecture within which to build future taxonomy extensions
– A repeatable build framework for future taxonomy builds
Our Programme –
Integrated Regulatory Returns
The Why and the When but not yet How
• Project had now been running since early Aug ‘03
• Now for the first time we considered technology !
• During Sep ‘03 a pilot was commissioned :
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Did the FSA need a Regulatory Taxonomy ?
Should it use XML or XBRL ?
Four weeks to reach decision !
3 months consultation
3 months response to consultation
Firms are given 12 months to amend systems
Go live date therefore of 1st Apr ‘05
Our Programme –
Integrated Regulatory Returns
The Why and the When and finally the How
Pilot concluded :
• FSA should have a Regulatory Taxonomy
– to deliver the capability and the goals identified in the ‘Data
Needs’ review and at the heart of the IRR
• XBRL the way to go
– It was faster to develop a solution with XBRL
– It was cheaper than the alternatives
– It facilitated capturing ‘domain expertise’ more easily
– Business rules and electronic validation key in moving the FSA
from a ‘supervisory’ to ‘regulatory’ regime . . . i.e. ‘monitor’ to
‘pro-active’
What have we (and our partners)
learned so far ?
Issues which quickly surfaced . . .
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Capturing regulatory ‘domain experience’ key to success
Ongoing engagement and buy-in of regulators vital
Basic taxonomy not complex but single taxonomy is
Important to define overall architecture before build
Programme has to be business led for success
More about Change Management than technology
IS not comfortable in playing support to a business led programme
IS needed though in implementation phase – major risk to program
Importance of defining Workflow requirements underestimated
Security not as straight forward as initially thought
What have we (and our partners)
learned so far ?
Lessons Learned . . .
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Setting vision and timetable forced the pace
Hindsight is the only exact science
You don’t know what you don’t know – but ask those who might
Skills in this area are scarce but are around
Communication is critical success factor – especially externally
Set out to carry all interested ‘communities’ with you
Integrated effort is essential at every stage
Velocity, speed and direction – all have to be present
Shared goals must be common across projects
What have we (and our partners)
learned so far ?
Key steps to success . . .
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Leadership
Change Management
Overall architecture
Programme governance
Data to information
Regime augmentation
Further Information:
www.fsa.gov.uk/regulatory _reporting
Policy:
•Consultation papers
•Policy Statements
•Taxonomies for mortgage and general insurance
•Communications:
•Events
•FAQs
•Core Messages
•Press Releases
Questions?