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The FCA’s adoption of “data-led” supervision has seen a deluge of data requests hit firm inboxes over the past few years. And that trend only looks set to continue: wealth managers received notice of a third, quasi-annual request in January 2025, with financial advisers due to receive their first data request this summer.
So how can you best manage your response to these requests and limit the risk of costly, and potentially avoidable, regulatory escalation?
What is data-led supervision?
The regulator’s use of frequent, sector-wide, mandatory data requests is a relatively new tool. These requests – covering areas like business models, fees and charges, people and controls, and more detailed data on client outcomes – give the FCA greater sight of firms’ activities and the potential risks associated with them.
This more proactive approach is extending FCA supervision to a much larger population of firms. It has also resulted in a sharp increase in the number of firms being subject to skilled person reviews, having requirements imposed on key aspects of their business, and incurring costs for remedial work.
How can I prepare?
Step one: Understand the FCA’s ‘exam question’
The first step to responding to any FCA information request is to make sure you understand what the regulator is trying to assess – or the FCA’s ‘exam question’. To do this, you should ask yourself:
- What issues or risks are the FCA trying to investigate?
- How do the specifics of the requested data link to this?
Taking time upfront to think about the risks and the implications for your data creates a strong foundation for the work to follow.
Step two: Plan your response
The second step is to put in place a plan for the activities needed to prepare your response and identify the resources to deliver it.
The complexity of this will depend upon the size and the structure of your firm. But in most cases, it will take a team of people from across the business with different specialist knowledge and skills. And to get this group of people working to a common plan requires coordination and project management. Getting the wrong people involved, or failing to have a realistic plan, is an all-too-common problem and a major cause of problems. Arming yourself with the right people, a clear plan, and someone to pull it all together, reduces risk and, ultimately, cost.
Step three: Check your data is accurate
The third step is to locate or extract the information and check it’s accurate. The FCA may ask for data that’s similar, but not identical, to existing management information. And some of the information that’s being requested may need to be created from scratch. Adapting or extracting your data to fit the specific requirements stipulated by the FCA can be time consuming and require the combined know-how of the business and support functions such as IT.
Checking the data is accurate is equally critical and requires some lateral thinking. For example, we’ve seen firms caught out after submitting technically accurate responses to FCA data requests, only to discover that it revealed inaccuracies with the data submitted within their standard returns. Inconsistencies like this can be a trigger for regulatory follow-up questions and, in the worst cases, escalation.
Step four: Help the FCA understand your data
The final step is the preparation of the data submission itself. Typically, the FCA will mandate a format for each element of the data request. Where this is not the case, firms need to think about how they present the data they have chosen to include. Either way, it’s important to explain your data, including:
- highlighting any assumptions you’ve used,
- signposting any “noise” in the data that could be misleading, and
- providing additional context on the information submitted.
Preparing “guidance notes” alongside your data submission, aimed at helping the FCA interpret the data accurately, can avoid any unnecessary confusion or, worse, the regulator inferring non-existent wrongdoing.
How can Bovill Newgate help you prepare your data request?
We understand how FCA data requests are structured and how best to complete them. Our team can make sure the data you’re reporting to the regulator is accurate and help you understand how it’s likely to be perceived.
Get in touch if you’d like to discuss any of this further.
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