Financial Statistics Expert Group meeting

Minutes, 22nd January 2015, 2pm

ONS, Drummond Gate, London

Attendees

Organisation / Name / Title
ONS / JJ (Chair) / Chair & Deputy Director, Government, Corporations and Classifications division
ED (Secretariat) / Secretariat & Flow of Funds Development
NV / Director of National Accounts and Economic Statistics
DM / Government, Corporations and Classifications division
DW / Financial Corporations
RJ / Strategy and Data Sources (attended via audio)
Bank of England / MR / Head of Statistics and Regulatory Data Division
OB / Macrofinancial Risks Division, Financial Stability Strategy and Risk
SB / Macrofinancial Risks Division, Financial Stability Strategy and Risk
AT / Monetary Analysis
LB / Flow of Funds Analyst - Statistics and Regulatory Data Division
PF / Manager - Statistics and Regulatory Data Division
BIS / DR / Economic Growth Analysis
HM Treasury / BW / Credit & markets branch
OBR / PD

Apologies

PD - ONS

PP - ONS

JB - BoE

TY - HMT

OP - HMT

LN - HMT

DH - HMT

TP - OBR

Introductions

JJ welcomed the group and thanked everyone for attending. Group members introduced themselves and their area of interest.

Minutes and Actions

Minutes were agreed and all actions marked as complete.

Flow of Funds update

DM gave an update on progress of the Flow of Funds Project (Annexe B).

MR presented a draft data sharing order that had apparently been drawn up by the Cabinet Office but not proceeded with. The Bank were pressing ahead to make progress on sharing data with ONS.

Discussions are at an early stage but SB informed the group that external experts who are up-to-date with Flow of Funds have been contacted.

DM went on to update the group on the outcome of an internal ONS Flow of Funds meeting with ONS Directors. The decision has been taken to separate Option 4[1] so that progress and pace is not hindered on Options 1-3 (see Annexe B for details of Options 1-4).

NV explained that senior sponsors should be considered on the ONS and BoE side for Option 4. JJ will likely be the Senior Responsible Owner for Options 1-3 and the new DG for Economic Statistics in ONS will likely be the SRO for Option 4. Interviews for the DG are to take place in February.

MR asked of the ONS process for obtaining external data from suppliers. DM explained that ONS can buy data from a supplier as a one off purchase. The benefits of thisdata would be in adding current assets to the information held on the IDBR to improve survey sampling stratification.

MR explained that the Bank do use data from one well known supplier but are looking at alternatives as the main disadvantage is timeliness. One of these alternatives will be combining sources with Companies House data. ONS will be kept informed of progress.

Discussions moved on to SDDS+ which does contain some Flow of Funds. SDDS+ includes whom-to-whom tables that are more detailed than anything under ESA10.

MR queried whether the ONS has a preferred method of conducting consultations. DM explained that there is a standard ONS method and JJ asked if the group held a view on the best way to consult. NV stressed that wider support is desired and OB explained that academics and those in financial markets could be approached.

JJ asked the group if membership of FSEG was sufficient for reporting to their respective organisations. To further reporting on Flow of Funds, MR suggested setting up a conference and publishing dates well in advance to ensure attendance from interested users.

AT asked if there were plans to resurrect the dividends and interest matrix once Flow of Funds is set up. NV agreed it was a good idea.

Financial Questionnaire Development Process

RJ presented her paper on questionnaire development.

PF asked what feedback was provided by the Australian Bureau of Statistics and if it was similar to that provided by the Bank. RJ explained that they gave two types of feedback i) data collection methods ii) National Account concepts. ABS have a similar set of surveys to ONS so their feedback was useful.

JJ asked if we could share the ABS feedback with the group.

SB asked how the Collective Investment Funds Survey fitted with other ONS surveys of the financial sector and which financial industries / SIC codes would fall under each. RJ explained that the individual surveys were tailored to particular financial firms but that the different surveys have a lot in common.

SB asked whether survey content is fixed for a period and when there were windows for change. DM responded by explaining that the new CORA platform in ONS is more adaptable, making it easier to make amendments to surveys. However, experience has shown that respondents establish automated systems to provide responses automatically so it is important that this is kept in mind.

RJ is moving to Methodology Directorate and was thanked for all her efforts by JJ and the group.

ACTION: RJ to examine whether the ABS and BoE comments on the financial surveys dovetailed and circulate feedback.

Financial Corporation Project update

DW presented his paper (see Annex B).

JJ thanked the group for their input around lifting the GNI reservation.

AT asked whether movement would be seen resulting from holding companies – are any PNFCs going to become Financial Corporations? There would be some movements but this is about improvements in coverage. DM stressed that changes should be seen as a significant improvement.

OB asked if there was a paper – DM explained that the European Taskforce Report contains detail.

There was some discussion around Bank comments on ONS surveys and how the Bank could provide assistance. It was agreed that more information on assets for sampling units would be beneficial.

ACTION: DW to circulate the European Taskforce Report.

ACTION: DM to speak to BoE about obtaining information on units with large assets to keep within survey samples. (DM has emailed SB about this).

Future of MQ5 publication

DM presented a note on the future of MQ5 publication. Based on current plans (which are subject to change) MQ5 will no longer be published after Q4 2015. A formal consultation is being drafted and DM would be welcoming of any comments from the group.

NV explained that stopping MQ5 is about managing the break to move to an improved position.

AoB & Close

JJ asked if there were any views on publishing minutes. MR reported they had attended an RSS talk by John Pullinger with Flow of Funds given as an important development area so having minutes published might assist interest users. It was agreed that minutes would therefore be publish in future.

The next meeting will be arranged for April and the remainder booked to the end of this calendar year.

ACTION: ED to arrange the next FSEG meeting for April and future meetings.

Actions

Owner / Action
RJ / RJ to examine whether the ABS and BoE comments on the financial surveys dovetailed and circulate feedback.
DW / DW to circulate the European Taskforce Report.
DM / DM to speak to BoE about obtaining information on units with large assets to keep within survey samples.
ED / To arrange the next FSEG meeting for April and future meetings.

Annexe A

Annexe B

From: DW (ONS)

FINANCIAL PROJECT

Update for the Financial Statistics Expert Group 22 January 2015

Background

The changes introduced by ESA 2010 and BPM6 are particularly extensive for financial corporations (FINCOS) with a number of new concepts introduced and others clarified or expanded. Significantly the definition of financial services has enlarged and subsectoring of financial corporations has expanding from five to nine subsectors (see Annex).

The financial project was set up in early 2012 to deal with this change. The aims of the project are to:

  • Meet ESA 2010 and BPM6 regulation for financial corporations' (FINCOS) and private non-financial corporations' (PNFC) by Blue Book 2019;
  • Re-platforming of the FINCOS systems;
  • Clear the ESA 95 GNI transversal reservation on Financial Intermediation Services Indirectly Measured (FISIM).

In achieving these aims we will also resolve many pre-existing issues in the FINCOS sector.

The broad approach of the Financial Project has been to become conceptually compliant with ESA 2010 and BPM6 at Blue Book 2014. In parallel to this, work towards the required subsectoring at Blue Book 2017 (using an agreed derogation).

We also have to consider further demands such as SDDS+, NSQR and FoF (whom-to-whom).

Key Achievements

  • Conceptual compliance with ESA 2010 was achieved at Blue Book 2014 (including pensions and FISIM);
  • Through collaboration with BoE, agreement was made in January 2015 with Eurostat to lift the GNI transversal reservation on FISIM (ESA 95);
  • Implementation of the Financial Institutions Register Survey (FIRS) to clean the financial sector on the Inter-Departmental Business Register (IDBR) – 75,000 businesses surveyed so far;
  • Worked with BoE to ensure their surveys are compliant with ESA 2010 and BPM6;
  • Worked with BoE on holding companies – including workshop on holding companies;
  • Re-platforming FINCOS non-monetary systems.

Summary of recent progress

  • New Financial Services Survey (FSS) developed (full survey methodology & new system) – covering over 70,000 businesses in 20 industries;
  • Securities Dealers questionnaire redeveloped (new system);
  • Documentation of data sources for financial account and balance sheets.

Planned in the next quarter

  • New Financial Services Survey (FSS) starts Q1 2015;
  • Redeveloped Securities Dealers Survey starts Q1 2015;
  • Continued IDBR improvements;
  • Survey development continues – focused on money market funds (S.123) and non-money market funds (S.124);
  • Initiation of sectorisation work – there will be a workshop with ONS and BoE on 4th February 2015;
  • Continued system re-platforming and development.

Actual and potential problems

  • New FSS. Covering over 70,000 businesses in 20 industries with a 2,000 sample will be challenging - we plan to make further improvements to survey methodology over the coming few years;
  • Incorporating new and redeveloped data sources into the National Accounts and completing the new sectorisation will be difficult and made more challenging as we also introduce revaluation and other changes in volume accounts and aim to re-platform our sector accounts systems for Blue Book 2017.

Annex

Expansion of Financial Corporations ESA 95 to ESA 2010

The below diagram shows the change from five (ESA 95) to nine (ESA 2010) financial subsectors. It also shows the movement of non-financial holding companies from non-financial corporations (S.11) to captive financial institutions (S.127).

[1] See slides for details of project options