30 November 2022 • Governance Risk & Compliance
The IFPR is approaching its one-year anniversary and the majority of firms are now familiar with the new ICARA process. A year on and the impact of new requirements is still causing ongoing challenges for fund managers. It’s not just the UK noticing the impact of new regulations; the EU introduced the Sustainable Financial Disclosure Regulation (SFDR) in 2021 and in the US the Securities and Exchanges Commission (SEC) has proposed substantial revision to Form PF. Regulators are requiring more granular reporting and expecting higher quality of data. With the need for various reporting obligations, across multiple jurisdictions and governing bodies, firms require solutions for digitising data management and establishing partnerships with services providers to share the workload burden.
FCA states the quality of some MIFIDPRU regulatory returns have not met expectations
On the 8th June 2022 the FCA released its first newsletter to investment firms which reviewed the first set of MIFIDPRU regulatory returns submitted in May 2022. The newsletter stated that the “quality of some of the submissions does not meet the FCA’s expectations and contains inaccurate and/or incomplete data.” The FCA has not stipulated potential action against investment firms for submitting incorrect or missing data, but that’s not to say they won’t. Funds have a responsibility to their investors that they are in adherence with regulations, so the importance of quality data management is imperative. Investors will always complete comprehensive DDQ’s before they start working with a new fund manager so it’s important that the fund has a robust data strategy.
How could digitising regulatory reporting improve efficiencies?
Digitising reporting procedures improves the quality of data; creating automated workflows means there will be less margin for error. Centralis Governance, Risk and Compliance have all the frameworks in place to help take the worry and complexity out of data management. Technology continues to evolve; the FCA, for example, replaced the Gabriel reporting system with the RegData platform back in 2021. This signifies the importance of using an up-to-date reporting portal as the use of legacy reporting systems will present issues surrounding the accuracy of data and efficiencies of its usage.
Time consuming reporting causes increased risk of errors
Fund managers are expected to produce an extensive volume of regulatory reporting. Centralis Governance, Risk and Compliance are aware that the Annex IV reporting, for example, alone requires answers to 300+ questions. In addition to this, with the multiple returns required for IFPR since January 2022 the opportunity for error increases. With different regulatory reporting requirements, from multiple jurisdictions, and various deadlines and frequencies of reporting this can prove unmanageable for some firms using their internal resources alone. By establishing strategic partnerships with service providers such as Centralis Governance, Risk and Compliance firms can mitigate the risk of inaccurate data submissions, save time, and keep good relations with the regulator. Firms focused on growth must look for scalable reporting solutions that proactively address changes to markets and regulations.
If you are a regulated firm operating under the FCA and would like to improve the complexities of your reporting please contact your Centralis Governance, Risk and Compliance Advisor.