On 16 June 2022, the FCA published a speech by its CEO, Nikhil Rathi, entitled ‘Shaping the rules for a data-driven future’.
Key points in the speech include:
- As the complexity and breadth of data broadens, so too will the FCA’s remit. Financial service products are moving away from legacy institutions to tech firms and other challengers who hold data.
- Digital developments can help mitigate risk. The FCA’s regtech systems monitor transactions and spot outliers that could suggest fraudulent behaviour. The FCA is already working on automated systems for its threshold permissions.
- As frictionless trading gathers a pace, there will need to be more co-operation between regulators across borders and industries.
- Artificial intelligence (AI) if implemented by machine learning could have the same implicit biases that humans have.
- For regulators, the policy challenge for the future will be about complexity and breadth: in the AI and data space, rules will cover multiple areas including financial services, data protection, labour law, competition policy.
- Regulators will have to ensure that firms can show not just how data was gathered or stored or used, but why it was decided it was important in the first place and how they avoid it being used to discriminate against minorities and people with other protected characteristics.