Setting and maintaining higher standards
The FCA’s recently published business plan for this tax year focused on three key areas the regulator intends to work towards improving over the next 12 months. The business plan shows a pragmatic approach, noting that many outside factors (technology, innovation, consumer behaviour and markets) can influence outcomes, but the FCA “challenge” themselves to continue to work towards a better regulatory framework for the UK.
The business plan notes “The scale of the FCA ambition to become a data-led regulator means that we are making significant progress across a number of data and digital programmes. These include exploiting our investment in cloud technology, implementing new digital capabilities and designing new data solutions required by the front line of the business. Our ambition this year is to complete a major upgrade to our core regulatory system and improve our intelligence capabilities through the automation of analytics tooling, helping us detect and respond to consumer harms faster.
The Centralis Group Solution
Centralis is leading the way with our own digital transformation, focussing on these three key areas to deliver benefit to the sector and our clients:
- Messaging and storage
- Customer experience and accessibility
- Client portal and app
- Blend of digital and human capabilities
- Improved processes and data management through automation and re-engineering
- Significantly decrease manual processes and interventions
- Create more “value add” time
We have developed our front and back-end solutions to enhance customer experience, mitigate risk, and improve quality of service. All market trends and analysis point towards a future where such digital enhancements are vital to growth and success, and the FCA’s plan is a continuation of this.
Next steps for data and AI
The plan goes on to say “We’re actively exploring how we can use advanced analytical techniques, such as machine learning and AI, for our own supervisory and enforcement. Together with the Bank of England, we recently published the final report of the AI Public-Private Forum (AIPPF) to better understand how AI is changing UK financial markets. Building on this, we will publish a Discussion Paper on AI later this year. We are also exploring the concepts of ethics and bias in algorithms and AI to ensure that all technologies – including AI – are used in a responsible way that avoids causing harm to consumers. Our investment in technology will continue, including developing a Digital Unified Intelligence Environment to connect the vast array of data and intelligence we hold across our systems. This will deliver key actionable insights to our teams to decisively spot and stop harm, delivering the right data, at the right place, at the right time.”
Digitisation in the alternatives sector
The FCA is clear the financial services sector is experiencing some transformational tailwinds, not least in operational processing and forecasting functions, which are benefitting from the current revolution in tech. The alternative investment arena is no exception, and we are currently witnessing seismic shifts in how transactions are managed, who records this information and what that information is used for to benefit the business going forward. The regulator is also focusing on this key area to help them supervise firms more effectively.
With digitisation comes the risk of operational disruption, which is inevitable. The Centralis solutions assist firms to be operationally resilient – working to prevent, respond to, recover and learn from operational disruptions. The FCA has introduced new rules and guidance to strengthen operational resilience and are scaling up efforts to deal with those who can’t meet the new standards. “From 31 March 2022 to 31 March 2025, we will assess how able firms are to remain within their impact tolerances – the maximum tolerable amount of disruption to an important business service – ahead of the 31 March 2025 deadline, from which point they will need to show they can remain within their impact tolerances.”
The plan is well received by the Centralis team and provides ongoing guidance on how we can best support our clients as they continue to develop their digitisation strategies for the new regulatory approach.