UK's Financial Services Authority: Integrated Reporting Will Help Financial Firms

The Financial Services Authority (FSA) took a significant step forward today in its plans to implement electronic reporting for regulated firms in the UK. It has confirmed the framework for Integrated Regulatory Returns and that Mandatory Electronic Reporting (MER) will be introduced for most regulated firms. The principal aims in implementing electronic reporting are to simplify and streamline the current paper-based process whilst reducing reporting costs to firms. David Kenmir, FSA Managing Director, Regulatory Services Business Unit, said:

"The new system is an important development in the FSA's aim to be an organisation which is more effective and easier to do business with.

"The new Integrated Regulatory Return (IRR) will be based on the type of business firms undertake and will align reporting periods with firms' financial years enabling them to use the information they already generate for their own business purposes, for regulatory purposes too.

"Integrated reporting will:

• improve our effectiveness in meeting our statutory objectives while reducing costs;
• ensure that the data we collect is more closely aligned to the regulatory process;
• eliminate redundant data requirements; and
• minimise ad hoc data requests from us to firms."

We propose to phase in MER over the next few years requiring regulated firms to submit their integrated returns to the FSA electronically using either a web browser based form or directly using electronic system-to-system transfer. MER will start on 1 April 2005 for firms coming under the new general insurance and mortgage regulatory regime and for IFAs and other retail investment firms. At the same time mandatory electronic reporting of complaints data will be introduced for almost all firms. We expect to implement MER for other regulated activities concluding with deposit takers in 2007. We are working closely with Information Technology and Software companies to ensure the transition to the new reporting system is implemented smoothly and effectively. We will give firms sufficient time to prepare for the changes we are proposing, based on the principle that a firm should have twelve months to implement systems changes.

Chris Wood, Chairman of Intellect's Financial Services Committee, said: "The Information Communications Technology industry is committed to working closely with the FSA to enable it to deliver an efficient and effective electronic reporting system to the financial services industry. There is a critical need to establish a common understanding of the XBRL technical standards amongst the Independent Software Vendor community, and of the new software requirements of the financial services firms. Intellect is dedicated to working with the FSA and the Software Suppliers Advisory Panel (SSAP) to ensure this happens, and to keeping the channels of communication open to enable the project to be implemented smoothly."

Background

1. The new reporting framework is described in Policy Statement 04/8: Regulatory reporting - a new integrated approach published today. The Policy Statement is available here and on our regulatory reporting page.
2. PS 04/8 also contains feedback to Consultation Paper 198 Regulatory reporting - a new integrated approach published in September 2003.
3. PS 04/8 also introduces revised complaints data and a requirement for firms to annually confirm the accuracy of the standing data the FSA holds for them.
4. Also published today is Policy Statement 04/9, Reporting requirements for mortgage, insurance and investment firms, and audit requirements for insurance intermediaries.
5. The FSA Software Suppliers Advisory Panel has been established to support the introduction of electronic reporting for regulated firms. It represents the community of software suppliers that provide relevant systems to firms. XBRL (eXtensible Business Mark-up Language) has been selected by the FSA for electronic reporting.
6. About XBRL: XBRL (Extensible Business Reporting Language) is an electronic format for simplifying the flow of financial statements, regulatory data and other financial information between software programs. It is an XML-based, royalty-free open standard that enhances the usability and transparency of financial information and allows it to be more easily communicated via the Internet. More information about XBRL is available on its website.
7. About Intellect: Intellect is the trade association for the UK IT, Telecommunications and Electronics industries in the UK. It represents a membership of over 1000 companies, spanning blue-chip multinationals to early stage technology companies, within an industry that together contributes around 10% of UK GDP and at least 15% of total UK trade. More information about Intellect can be found on its website.
8. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection of consumers; and fighting financial crime.
9. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.