FCA questions the quality of data
Data quality review of Prudential regulatory reporting by MIFIDPRU investment firms
The FCA continues to focus on the poor quality of data many firms are submitting through their regulatory returns. Regulatory attention in this sphere can quickly escalate, with questions on returns often triggering wider concerns regarding a firm’s capital, liquidity, and the effectiveness of its governance and risk management framework. We have distilled here their recent observations alongside our recommended steps to help avoid getting the regulator’s attention.
In its review, the FCA drew on returns from many of the 3,800 firms who submitted returns between January 2024 and March 2025. Firms’ data was tested to see whether:
it was consistent with the MIFIDPRU Prudential sourcebook’s guidance;
it was broadly consistent with comparable data from alternative sources; and
the reported data changed over time within a credible range
What the FCA Found
Only 60% of firms provided data that passed all of the tests. 30% showed some errors or were found to have misreported. And 10% showed significant failings with recurring errors.
In the FCA’s view, this ‘shows fundamental weaknesses in those firms’ regulatory reporting systems and controls’.
Errors highlighted include:
Inconsistent reporting across multiple data sources: For example, MIF007 not reflecting what was reported in the firm’s ICARA document.
Inaccurate implementation of guidance: For example, reporting the own funds threshold requirement (OFTR) as lower than the own funds requirement (OFR).
Incorrect reporting for the type of investment firm: For example, non-SNI firms not reporting K-factors.
Incorrect reporting units and data entry issues: For example, firms reporting in single units where they should be in thousands.
What does this mean for firms
Several firms will receive an email from the FCA (we can guess that this will go to some or all of those in the 40% of firms failing the tests). It is likely many firms will need to correct and re-submit their returns. Indeed, these firms may discover they need to hold additional capital and liquid assets to satisfy the MIFIDPRU requirements.
Practical next steps
Revisit regulatory return processes: Review how returns are assembled to ensure your approach aligns with the MIFIDPRU guidance.
Strengthen validation processes: Interrogate the source data used in regulatory returns, confirming that reporting is driven by accurate information.
Enhance monitoring beyond timeliness of submissions: We often see firms limiting their monitoring to checks that returns have been submitted on time. This is insufficient. Your monitoring should be in the detail of the returns, challenging what has been reported and set on finding any inaccuracies and rereporting accordingly rather than just leaving old submissions in the past.
In the first instance, firms would do well to revisit their processes for the assembly of regulatory returns. Go back to regulatory fundamentals to check that your approach to each return aligns with the rules. And interrogate the source to validate that accurate information drives the reporting.
Our offering
Our Prudential team supports a wide variety of clients with the completion of regulatory returns and has supported many more with advice on the reporting required.
In response to this FCA review, we have packaged a ‘short, sharp review’ that enables our team to promptly determine where your reporting is falling short.
Get in touch with us to learn more.
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