PRA transforms data collection into regulatory dialogue

Vicky White, Director of Prudential Policy at the Bank of England, highlighted data as a foundational dialogue between the Prudential Regulation Authority (PRA) and regulated firms regarding risk management.

This structured conversation is vital for understanding the complex financial system at scale and underpins the PRA's objectives of promoting safety and soundness, competition, and UK economic competitiveness.

The Future Banking Data (FBD) programme aims to significantly reduce banks' reporting costs while enhancing data relevance, quality, and timeliness.

Regulatory returns, such as COREP and FINREP, provide a standardized baseline for assessing firms' balance sheets and resilience, enabling cross-firm analysis and the identification of emerging risks.

Thematic and ad hoc collections offer flexibility to explore specific risks in depth, adapting to new issues and drawing on firms' existing management information.

Stress tests add a forward-looking dimension, modeling responses to adverse scenarios and informing macroprudential policy.

The PRA acknowledges firm feedback regarding challenges like understanding data usage, unclear reporting requirements, and the sheer volume of requests.

With over 400 banking data templates, some legacy collections have lost value.

The PRA has begun reducing this burden, deleting 37 templates in December and making reporting more proportionate for smaller firms.

However, closing data gaps, highlighted by events like Archegos, remains crucial for financial stability monitoring.

The FBD programme is guided by four principles: anchoring data dialogue in PRA objectives, avoiding repetition, ensuring ease of firm engagement, and evolving for future relevance.

Ongoing initiatives include further template reductions and a new communication portal.