The IFPR is approaching its one-year anniversary and most firms are now familiar with the ICARA process. A year on, new requirements are still creating operational challenges for fund managers.
This pressure is not limited to the UK. The EU introduced SFDR in 2021, and in the US the SEC has proposed substantial revisions to Form PF. Regulators are asking for more granular reporting and higher data quality.
With multiple reporting obligations across jurisdictions and regulators, firms increasingly need solutions for digitising data management and partnering with service providers to share workload burden.
FCA states the quality of some MIFIDPRU regulatory returns has not met expectations
On 8 June 2022, the FCA released its first newsletter to investment firms reviewing the first set of MIFIDPRU regulatory returns submitted in May 2022. The FCA stated that "the quality of some of the submissions does not meet the FCA's expectations and contains inaccurate and/or incomplete data."
While the FCA did not stipulate immediate action against firms for incorrect or missing data, funds still have responsibility to investors to remain compliant. Data quality and governance are therefore critical.
Investors will continue to perform thorough due diligence before appointing managers, making a robust data strategy a practical requirement as well as a regulatory one.
How could digitising regulatory reporting improve efficiencies?
Digitising reporting procedures can improve data quality, and automated workflows can reduce manual error risk. Centralis Governance, Risk and Compliance supports firms with frameworks designed to reduce complexity in reporting and data management.
Technology is also moving quickly. The FCA replaced the Gabriel reporting system with RegData in 2021, underlining the need to keep reporting environments up to date. Legacy processes can undermine both accuracy and efficiency.
Time-consuming reporting causes increased risk of errors
Fund managers are expected to produce significant volumes of regulatory reporting. Annex IV reporting alone can require responses to 300+ questions. Since IFPR took effect in January 2022, multiple return obligations have further increased the opportunity for error.
Different jurisdictions, varying reporting frequencies, and overlapping deadlines can be difficult to manage with internal resources alone. Strategic partnerships with specialist providers can help reduce submission risk, save time, and support constructive regulator relationships.
Firms focused on growth should consider scalable reporting solutions that can adapt to changing market and regulatory expectations.
If you are a regulated firm operating under the FCA and want to improve your reporting complexity, please contact your Centralis Governance, Risk and Compliance Advisor.