XBRL – The Financial Services
Authority (FSA) UK Context
The FSA’s perspective on the use of XBRL
(eXtensible Business Reporting Language)
for data exchange with the industry in the UK and other financial
regulators
Presented by : Ayan Kar
XBRL Cross Sector Seminar (Members only session)
Madrid, Spain, 1st Jun 2012
Copyright © The FSA, UK, 2012
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Agenda
1. The FSA’s scope of regulation
2. Data exchange methods
3. The historical background of XBRL in the FSA
3. Regulatory reform in the UK
4. Potential benefits
FSA Unrestricted
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1. About the FSA
“The Financial Services Authority (FSA) is a non-governmental body with statutory powers given to
it by the Financial Services and Markets Act 2000.” (Source www.fsa.gov.uk)
•
Key characteristics:
– Independent body that receives all its funding through a levy on the financial services industry
– Accountable to H.M. Treasury and, through them, Parliament
•
Statutory objectives:
– Market confidence
– Financial stability
– Consumer protection
– Reduction of financial crime
•
Scope includes:
– Any firm or individual that carries out a regulated financial service market activity in the UK must be
authorised by us, unless they are exempt.
– This includes over 27000 entities spanning across major financial organisations, small firms and
independent financial advisors
•
The regulatory reporting data:
– Collected using proprietary XML standards and there over 80 data items collected by the FSA as specified
in out handbook
– Defined for the firms depending on its size and permissions granted to it
FSA Unrestricted
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1.1. Our scope – who do we regulate?
We regulate more than 27000 entities within the UK that span different business types and are subject to different
aspects of regulation. One of our key challenges lie in managing diversity of regulatory policies & the population.
Breakdown by Legal Status
Breakdown by business types
Breakdown by Entities allowed to
hold Client Assets (CASS)
Firms in scope for MIFID ϕ
Markets Conduct Regulation
Circa 10% of Firms are subject to
Prudential Standards for Banking,
Investment Firms & Building
Societies ϕϕ
ϕϕ
ϕ
FSA Unrestricted
Copyright © The FSA, UK, 2012
Firms most impacted by EBA and EIOPA directives
Firms mostly impacted by ESMA directives
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2. Data exchange methods
Deposit Takers
Investment Managers
Services (UK) of an Overseas Firm
Advising, Arranging & Dealing as agent
FSA Unrestricted
Others
Solvency I (circa. 650 firms)
Insurance Firms
CRD & CRR (circa. 2800 firms)
Open-ended investment company (OEIC)
MIFID (circa 4600 firms)
Not Specified
Prudential & Business Conduct (Financial Services & Markets Act 2000)
The FSA Regulated Entities (Defined by FSMA 2000)
The existing data exchange arrangements are based on the Integrated Reporting Standards that were adopted in 2006,
these are based on proprietary XML standards developed by the FSA.
UK Regulatory Architecture
(Internal Twin Peaks
Apr 2012)
FSA (Financial
Services Authority)
European Insurance
& Occupational
Pensions Authority
(EIOPA)
European Banking
Authority
(EBA)
Prudential
Business Unit
(PBU)
European
Securities &
Markets Authority
(ESMA)
Conduct
Business Unit
(CBU)
UK Regulatory
Bodies
H.M. Treasury
Bank of England
HMRC
Copyright © The FSA, UK, 2012
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3. Historical background of XBRL in the FSA
We decide what data to collect and how to collect it based on the following criteria, these activities span multiple years:
• Amendment of the Handbook rules through a Legal process, Cost Benefit analysis and Public consultation
• Policy driven initiatives like, Integrated Regulatory Reporting, Liquidity, Solvency II and Capital Requirements
Directive by the EU
2002
2003
XBRL consultation
formally launched
through,
• Consultation on Integrated
Regulatory reporting – a
new integrated approach
• 1869 CP197 Regulatory
reporting (Consultation
paper)
New Regulatory
Reporting
environment for the
FSA (DP12) is
published
2004
2005
CBA on XBRL
explained key
aspects being
considered included
cost to Firms and
maturity of
standards,
• David Kenmir’s speech
to Complitech.
2006
The FSA embarks on
the adoption of
Integrated Regulatory
Reporting (IRR) based
on XML and rolls out
GABRIEL (Gathering
Better Regulatory
Information
ELectronically)
We explain our intention
to use XBRL for MLAR
and RMAR returns,
mentioned in,
XBRL statement on use
published by the FSA,
decides not to adopt XBRL
due to,
• PS04/9: Reporting requirements –
Feedback on CP197
• Integrated Reporting update, reiterates need for XBRL standards.
• Lack of XBRL experience in UK
and hence the reluctance of the
firms in adopting XBRL.
• No other regulatory body had
adopted this as a standard and
hence the benefit of cross border
standardisation was low.
FSA Unrestricted
2007 2008
2009 2010
2011
EBA strongly
recommends
the use of
XBRL for
COREP and
FINREP
(COREP minutes
on FSA website)
Use of custom XML reiterated, however the
review notes the increase
use of XBRL provided in
the IRR update statement.
2013
2012
FSA to publish its
interim position on
adoption of XBRL
that is likely to,
• Explain the scope to be
limited to CRD IV & SII
• Interim position subject to
Reg Reform based
changes in 2013
EIOPA announces that it
will use XBRL for
reporting and asks for
feedback to its technical
consultation (EIOPA
Legal cutover to
the new regulatory
architecture for UK
announcement)
(All updates sourced from www.fsa.gov.uk)
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4. Regulatory reform in UK
Financial markets have changed in the ten years since our inception. The Government has decided that in today’s
market it is appropriate for the prudential supervision of banks and insurance companies to be carried out separately
from work to protect consumers and regulate markets. The Government has therefore decided that the FSA will be
divided and its activities split between two new regulators.
New revised distribution of firms
The new Prudential Regulation
Authority (PRA), a subsidiary of the
Bank of England, will be
responsible for ensuring our
financial system is stable. It will
supervise the ‘safety and
soundness’ of around 2,000 firms.
The new Financial Conduct
Authority (FCA) will focus on getting
a fair deal for consumers. It will
regulate the conduct – the way a
firm behaves and interacts with its
customers – of some 27,000 firms,
as well as the prudential supervision
of around 24,500 firms.
FSA Unrestricted
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4.1. Impact on data exchange
Services (UK) of an Overseas Firm
Insurance Firms
Deposit Takers
Others
Professional Entities
Insurance
Not Specified
Open-ended investment company (OEIC)
Investment Managers
Services (UK) of an Overseas Firm
Advising, Arranging & Dealing as agent
Solvency II (circa. 650 firms)
Insurance
Prudential non-CRD Submission to PRA
Advising, Arranging & Dealing as agent
CRD IV (circa. 2800 firms)
Banking
MIFID (circa 4600 firms)
Branch (UK) of a Overseas Firm
Consumer Conduct & Prudential Submissions (Financial Services Bill 2012)
FCA Regulated
PRA / Dual Regulated
Data exchange arrangements post regulatory reform, CRD IV & SII implementation are likely to get more complex.
UK Regulatory
Architecture (post legal
cutover Mar 2013)
Prudential
Regulatory
Authority
(PRA)
Data Sharing
Financial Conduct
Authority
(FCA)
European Banking
Authority
(EBA)
European
Securities &
Markets Authority
(ESMA)
UK Regulatory
Bodies
H.M. Treasury
Bank of England
HMRC
Others
FSA Unrestricted
European Insurance
& Occupational
Pensions Authority
(EIOPA)
Copyright © The FSA, UK, 2012
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5. Potential benefits
EU Regulatory Bodies
• Consistent Terminologies
• Reduced risk of misinterpretation
• Re-use across NSAs
The FSA
• Faster time to implementation (since EU conducts the CBA)
• Consistency across industry sectors (specifically for
overseas branches operating in UK)
• Reduced complexity of implementation across sectors
UK Regulated Firms
• Implement once and re-use for other NSAs
• Common language across geographies
• A clear roadmap for changes
FSA Unrestricted
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XBRL - The FSA Context