We all know the Financial Conduct Authority’s Consumer Duty has reshaped regulatory expectations for financial services firms.
This is particularly true when it comes to data with regulatory reporting and data sharing between distributors and product manufacturers in mind.
Ongoing FCA data information requests require firms to demonstrate on an ongoing basis that they are delivering good outcomes for their clients.
Plus, the regulator continues to focus on ongoing advice services, client vulnerabilities, firm consolidation activities and the new managed portfolio scheme (MPS) directive.
This means all parties involved require systems and controls that support accurate, timely and proportionate data exchange and reporting.
At Model Office we have identified five data management strategies firms should engage now to ensure they become truly data driven.
Data identification: What needs to be shared and why
A foundational challenge lies in identifying the right data to share. There are several key data categories that require segmenting into quantitative and qualitative types.
These include; fact find, holdings and redemptions for quantitative measures, and client relationship management, complaints, buyer behaviour, meeting vulnerabilities and poor customer outcomes on the qualitative side.
Firms must ensure that data being shared has an actionable purpose under FCA rules like PRIN 2A.3.18R and 2A.3.19R.
For example, manufacturers using product sales data to assess distribution against the target market, while redemption patterns can signal early indicators of product misalignment, foreseeable harms and poor outcomes
Technology is therefore required to map internal data systems to these quantitative and qualitative categories, and validate the completeness and relevance of the data for governance, risk and compliance purposes.
Data access and availability: Getting to the right information
Even where data is well-defined, firms often struggle with access — especially in complex distribution chains involving product suppliers, platforms, advice firms and MPS.
Product manufacturers may not hold deep client-level insight, which is a key strength for advice firms, plus the tech infrastructure in current use may not allow or provide challenges to disaggregated data access and sharing.
The solution is for firms to take a holistic review of all technology across their business, plus factor in any legal barriers to data access and deploy strategy focused on integrating disparate systems across the chain to extract relevant data points.
As our diagram points out, a true tech eco-system can only be empowered by a data lake that is accessed by modern open tech software and systems that offer unfettered access.
Timeliness and frequency: Reporting cycles vs real-time needs
The FCA expects certain data to be reported in “real-time” (e.g. emerging harms or complaints) while other data can be reported periodically.
This dual requirement creates friction for firms that have not yet built real-time alert mechanisms into their operations.
This means firms across the distribution chain should take a two-tiered approach:
- Automated periodic reporting (e.g. distribution, holdings and redemptions).
- Event-driven notifications (e.g. life events, complaints, distribution challenges).
Building systems flexible enough to handle both structured batch reporting and spontaneous qualitative updates without overburdening teams is then crucial to ensuring timely and accurate reporting.
Standardisation and format: The push for consistent reporting
A lack of standardised structure and framework can lead to inconsistent data formats and reporting intervals, complicating analysis for manufacturers and advice firms alike.
There are templates available such as FinDatEx EMT, promoting a common language and reporting structure, but not all firms are yet ready or able to populate these templates fully.
Technology and Artificial Intelligence can now align internal data fields with external templates and standards, especially where legacy systems or bespoke processes are in place.
Monitoring and feedback loops: Closing the regulatory loop
Finally, but not least, firms must track whether products and services are delivering fair value and positive outcomes (PRIN 2A.9.8R and 2A.4.24R).
Advice firms must review their arrangements (PRIN 2A.3.19R) and flag emerging issues immediately (PRIN 2A.3.20R), while manufacturers must incorporate this feedback into product performance reviews.
Without robust and aligned monitoring tools, firms risk missing key indicators or failing to act on feedback, leading to compliance breaches.
Deploying end-to-end RegTech and oversight frameworks that provide ongoing data monitoring, benchmarking and gap analysis insights quickly are now required to ensure firms act on risks and build robust and compliant products and services.
The FCA’s Consumer Duty has significantly raised the bar for data governance across the financial services distribution chain. Firms must overcome tangible data identification, access and reporting hurdles to fully comply and deploy RegTech that delivers meaningful solutions to the data challenges discussed.
As systems mature and the industry adapts, the hope is for smoother data flows, more automated insights and, most importantly, better customer outcomes.
Chris Davies is founder of Model Office
