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Why Data is the Lifeblood of a Modern Regulator

FCA | Jun 16, 2022

Data driven regulation - Why Data is the Lifeblood of a Modern Regulator

Speech by our Chief Executive, Nikhil Rathi, delivered at the Dutch Authority for the Financial Markets (AFM) 20th anniversary seminar.

The future of regulation

  • As the complexity and breadth of data broadens, so too will our remit. Financial service products are moving away from legacy institutions to tech firms and other challengers who hold data.
  • And while data can help institutions identify risk, it can also entrench bias and make it more difficult for consumers to access loans or products such as insurance.

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  • Nobody can control how that data is used or which organisation, individual or regime looks at it.
  • Regulators in the coming decades may have to step in to decide on the boundaries of firms’ interventions. And they will also have to decide whether it is appropriate for financial institutions to differentiate on access and pricing of services on the basis of tracked data.

Data and the AI to help with risk

  • Our regtech systems monitor transactions and spot outliers that could suggest fraudulent behaviour and our organisation has moved to the Cloud and revolutionised the ease with which we can access vital data to prevent financial crime and protect consumers.
  • We have migrated more than 52,000 firms and 120,000 users to our RegData platform, which grants access to flexible and scalable data collections.
  • The disclosures we are requiring on environmental, social and governance (ESG) products are already breaking new ground and the FCA is partnering with other regulators to share our experience.
  • More data will give customers more power to choose products with better ESG ratings.

The future for regulators

  • International coordination in this area is becoming increasingly important – both in terms of effectively protecting consumers from the increased risks of digitalisation and from gamification across the provision of financial services.
  • 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.

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  • Regulators will have to ensure that firms can show not just how this 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.
  • That’s why we have to create diversity of thought in our culture and in our organisations so we can have a fighting chance of pre-empting multiple and competing interests.

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NCFA Jan 2018 resize - Why Data is the Lifeblood of a Modern RegulatorThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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