Presented%20by%20David%20Anderson

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Financial Services Authority, UKIntegrated
Regulatory Returns ProgrammePresentation
to9Th Annual XBRL ConferenceAuckland, New
ZealandWednesday 12th May 2004

• Presented by David Anderson
• Programme Director, Integrated Regulatory Returns

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What I will cover today . . .

• Background 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

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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 UKs 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)

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How did it come in to being ?
Background to what we are doing . . .

• It amalgamated nine legacy regulators and their
  scope
• Bank of England Banking Markets
• Building Societies Commission Building
  Societies
• Insurance Directorate Insurance Lloyds
• Friendly Societies Commission Insurance
• Securities Futures Authority Wholesale
  Investments
• Personal Investments Authority Retail
  Investments
• Investment Managers Regulatory Organisation Asset
  Management
• Securities Investment Board Oversight of
  three above
• Register of Friendly Societies Credit Units

Came into being in 1999, employs some 2,300
staff and is based in Canary Wharf, London
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The business need that was (and is) Electronic
Submission ?
Background to what we are doing . . .

• 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

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Background to what we are doing . . .

• Other factors . . .
• 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

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The need to be easier to do business with
Background to what we are doing . . .

• 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
  . . .
• 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

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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
  Programmes 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

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The Why and the When but not yet How
Our Programme Integrated Regulatory Returns

• Project had now been running since early Aug 03
• Now for the first time we considered technology !
• During Sep 03 a pilot was commissioned
• 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

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The Why and the When and finally the How
Our Programme Integrated Regulatory Returns

• 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

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Issues which quickly surfaced . . .
What have we (and our partners) learned so far ?

• 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

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Lessons Learned . . .
What have we (and our partners) learned so far ?

• Setting vision and timetable forced the pace
• Hindsight is the only exact science
• You dont know what you dont 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

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Key steps to success . . .
What have we (and our partners) learned so far ?

• Leadership
• Change Management
• Overall architecture
• Programme governance
• Data to information
• Regime augmentation

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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

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Questions?