’Heavy Tech’ Investing Key To Harm Prevention, Says FCA

July 19, 2022
Back
The UK’s financial watchdog has increasingly been investing in data and technology to reduce consumer harm and intervene more effectively, said its chief executive in a US speech.

The UK’s financial watchdog has increasingly been investing in data and technology to reduce consumer harm and intervene more effectively, said its chief executive in a US speech.

In a speech at the US Peterson Institute of International Economics, Nikhil Rathi, chief executive of the UK’s Financial Conduct Authority (FCA), explained that the regulator has “invested heavily in data and technology” to root out bad actors and regulate for the future.

According to Rathi, who came into the role in 2020, the regulator is redesigning its operational platform to adapt better and collaborate.

This will mean addressing threats, mitigating shocks and embracing opportunities, instead of addressing issues such as significant harm or risk after it has become embedded.

So far, this has included transferring 50,000 firms that it supervises across to cloud technology, as well as using analytical tools to speed up case management.

The FCA is also automatically scanning 100,000 websites every day for fraudulent or scam activity targeting UK consumers, while also taking down hundreds of these sites every year.

“There is and must remain a laser focus on the quality of data coming in, in the first place, and this is an area where we are holding firms increasingly to account,” said Rathi.

The FCA is examining what potential systemic risks are posed by the UK’s financial services sector’s reliance upon the resilience of services provided by a small number of critical third parties, including cloud providers.

The regulator will soon publish a joint discussion paper with the Bank of England setting out potential new measures, he said, adding that he sees cross-border cooperation as key.

Rathi also used the speech to tout greater UK-US cooperation on crypto-assets.

The UK and US held talks as part of the US-UK Financial Innovation Partnership in London recently. “We agreed to deepen ties on financial innovation after exchanging views on crypto-asset regulation and market developments, including in relation to stablecoins and the exploration of central bank digital currencies.”

The UK, US and Singapore also announced the launch of the IOSCO taskforce on decentralised finance and crypto-market integrity risks.

“These conversations are vital,” said Rathi. “We are demonstrably supporting responsible use cases for the underlying technology while ensuring it is not at the expense of appropriate consumer protection or market integrity.”

Rathi, previously chief executive of the London Stock Exchange Group, also touched upon the FCA’s recent Crypto Sprints, which the regulator initiated to develop policy solutions.

“Participants told us they wanted a regulatory regime for crypto-assets as a high priority, a matter that is not up to us to decide,” he said. “They also want regulation phased in over time, to allow firms and investors to prepare and for the rules to fit the evolving crypto-assets.”

In the past, innovative firms would have been pleading for less regulation, he pointed out. “Now they understand and appreciate that rules are there to help provide certainty.”

With the UK government currently in caretaker mode and a cost of living crisis intensifying, it seems unlikely that crypto regulation will be the government’s priority during 2022.

However, prime ministerial candidates Rishi Sunak and Liz Truss have previously expressed enthusiasm for making the UK a crypto hub and the opposition Labour Party too spoke in the press last week about doing away with EU laws on finance to encourage more innovation.

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

Still can’t find what you’re looking for? Get in touch to speak to a member of our team, and we’ll do our best to answer.
No items found.