Our interview with Jo Hill has a keen eye on the future, considering why an optimistic and forward-thinking approach is imperative for the regulatory environment. Jo explores the technological and data-driven advances available and considers why a shift in attitude, strategic approach and collaborative sharing is so important. She believes that to embrace the technological advancement, and therefore deliver real value, requires a greater investment in people and talent emphasising the humanity at the heart of innovation.
You have been in your role as Executive Director of Strategy and Risk at The Pensions Regulator (TPR) for over a year. What would you highlight as your key achievements in that time?
My primary achievement has been to successfully begin the implementation of the long-term strategy for TPR to guide what we are doing overall. This has involved us taking a futures approach to consider the challenges the pension system and savers may experience over the next fifteen years and consider how we, as the regulator, should respond. There is a deeply embedded opportunity for us to better exploit data and technology to help us in our job as the regulator, and we shall publish work on this shortly.
We are equipping ourselves for the future; I sponsored The Pension Regulator’s Future programme (TPRF) to its conclusion which has delivered a new target operating model for the organisation and we have begun the implementation of a significant technology programme to better equip ourselves for the future. We want to effectively harness technology and support our work as a regulator through the development of a data platform, better data interrogation and modernised systems.
Part of your remit has been focused on the better use of data to mitigate risk. Can you share an example of the impact this will have for pension savers?
We are working on a number of different ideas at TPR and have adopted an approach which is now well established within our data team: to start quickly and fail fast if we need to. We are not afraid to trial and write things off if required, it means that we can be more innovative and experimental with this approach.
One of the more successful projects we have been working on is around contagion risk. For example, if a supplier goes down and into administration we can better access what the contagion risk is right across the system – where are they likely to not pay invoices, what the impact might be across other companies and are they likely to not pay pension schemes. We have been working on a set of data models that quickly help us identify connections between various employers and pension schemes and what the impact might be in the event of failure.
In my previous role at the Financial Conduct Authority (FCA), there was a significant growth in confidence in our use of data, and I am keen to replicate that at TPR to allow us to better home in and identify where we want to deploy our resources. It will allow us to assess which schemes pose most risk to the pension saver; what the outcomes are for them; how we best decide which schemes require one to one supervision; and which ones we can allow more flexible supervision to ensure effective deployment of resources to the greatest areas of risk. This will provide maximum benefit to the pension saver.
We are starting to develop those models now and are taking the opportunity to learn from others, working with regulators and academia through an open approach to consider how we tackle some of these problems.
“We are not afraid to trial and write things off if required, it means that we can be more innovative and experimental with this approach.”
Your previous role at the Financial Conduct Authority focused on evolving its use of data and market intelligence. Can you tell us about that role and how the use of new methods and technologies allowed a shift in its approach to regulation?
At the FCA I was responsible for market intelligence and the use of data. It was a time when we had to evolve as a regulator and consider our use of technology and data, whilst simultaneously looking at how the market was developing and using data so we could efficiently regulate it. I was responsible for several streams in that transformation.
One of the streams which came under my remit was the Regtech work, where the focus was on innovation in a controlled and collaborative environment to use technology to better support regulation. In that particular area, we had great success with TechSprint events where we would invite along industry participants, academia and other key stakeholders and experts to work together on particular problems.
We would look at very intractable problems for the industry where there wasn’t much competitive advantage to be the first one getting it right. We worked collaboratively alongside industry to try and solve a variety of issues, such as: how to improve access to financial services for vulnerable consumers and how to better deploy technology to identify money laundering and prevent financial crime.
Another stream I also oversaw was the FCA’s use of Behavioural Economics and Data Science. We worked with academia and other experts about how we might apply new techniques to ourselves. At that time, we were looking at how we identified patterns in behaviour, and where to put more supervisory effort on certain individuals or firms. We used several new and innovative techniques to build models to crunch data more effectively and to understand where we should focus our approach and time.
The biggest success of these programmes was being willing and open to work in partnership with the industry and academia to learn together. I believe this approach made us better able to identify where risks could be posed in the future and get ahead of that.
How fundamental is the challenge posed by new technologies to existing market and regulatory structures?
We can either look at it as a challenge or simply as the next iteration of regulation. The world always evolves, and technology is the mechanism driving a lot of evolution and innovation at the moment. The challenge of evolution is the same as it has ever been; it is the pace brought about by technology that is much faster. For regulators there are challenges keeping abreast of that change, as well as the ability to recruit and retain the skills.
Traditionally, regulators have waited for markets to develop and opined on how it happened. Today, the pace is so much quicker, and my personal view is that we absolutely need to run alongside it more, rather than wait for it to happen.
The competition for talent is very real and we need new approaches to attract and retain people with rapidly developing skillsets and exposure to new technologies when there are many others looking to retain those people. To compete and attract the talent we must have a clear narrative as regulators as to why people should want to work with us in the public sector versus a large technology company, for example.
Which sectors are leading the way with digital innovation in regulation? Can you share examples of what they are doing and the impact it is having?
The work being undertaken by Nick Cook and his team at the FCA makes him one of my stand-out leaders in this space. His approach to adopting innovation and the nimble way he is building his teams to develop that work demonstrates his forward-thinking style.
More broadly across other regulatory markets, banking and the broader base of financial services are moving at a pace. There have been innovations in regulation, such as open banking, that have required and accelerated that.
There are also some really interesting innovations happening in healthcare at the moment with vast amounts of data available that can be used to help with patient diagnosis and clinical understanding. I think to understand where we are coming to next in this area, we need to look at what university students and academia are most interested in with these new techniques – that is always a very good indicator for the future.
“The challenge for regulators is to be open to innovation both as an opportunity and a risk.”
Does digital innovation allow, or indeed require, greater collaborative working between regulators, and between regulators, business and academia?
Our lives are more integrated today; digital innovation may be the driver or enabler of this but nevertheless I think digital technology is an opportunity for greater collaboration that cannot be missed. This is not done by merging regulation, but by being more collaborative.
One of the things that is on all our minds as regulators at the moment is the wealth of new technologies and approaches out there, as well as the number of options that could be applied, but there really is a limited set of resources across the broad family of regulation currently. Through collaboration and understanding the areas of focus for different regulators, we can prioritise our resources and share our learning.
Increasingly regulators are working with academia to tackle entrenched problems in new ways and I think this is an exciting development for regulated markets as new approaches to old problems emerge.
How far have UK regulators and businesses understood and embraced AI in your opinion?
AI is a bit of a buzz term at the moment, and I think focus is probably more on technological innovation. In an environment like the UK’s, which is very innovative and open, there are exciting opportunities. The challenge for regulators is to be open to innovation both as an opportunity and a risk, and develop approaches to both exploit the opportunity and manage the risks.
Do the advances in digital technologies require new skills for regulators? If so, how are these being introduced?
Advances in such technologies do require new skills, but not at the cost of the old skills. You will never replace a supervisor and supervisory judgement with a machine. We still need those skills and the ability to build that experience and judgement.
Where technology can help us is by taking a lot of the heat out of the diagnosis stage. For example, if we have 10,000 schemes to review, technology and analytics can help us filter and assess risk.
The skills to utilise this technology are much needed but competing for those within the market is challenging and means we need to have a multi-faceted approach to attract people. We have been looking at our proposition for experienced resource and we aim to think more creatively about how attract it. For example, we have considered whether more part time models fit better with people’s desire for flexibility, or whether work in partnership across other regulators and stakeholders to share and second resources.
We are also looking closely at how we grow our own talent, through apprenticeship pathways and graduate recruitment to really help develop people. We take a multi-layered approach, not just attracting experience from the market but looking at how we build pipelines for the skills needed through innovative working types and flexibility, as well as people working with us on specific projects for a certain duration. We need to get the narrative right about why people should want to come and work with us. Our approach really does rely on being innovative to allow us to compete.
Jo Hill Biography
Jo was appointed Executive Director of Strategy and Risk for The Pensions Regulator in 2018. She is responsible for corporate strategy and the associated regulatory model being developed through TPR Future. Jo was previously Director of Market Intelligence, Data and Analysis at the Financial Conduct Authority (FCA) accountable for the delivery of the FCA’s Data Strategy and Operations, RegTech agenda, the FCA’s recently established Advanced Analytics department and the Behavioural Economics and Data Science programme. Jo previously held a number of roles across the FCA and Financial Services Authority in strategy, supervision, authorisations and enforcement, as well as holding roles in the banking and insurance industries.