The Financial Conduct Authority has promised to play an active role in the development of regulatory technology after an “outstanding response” to a consultation on the issue.
It made the committment in a feedback statement following its November call for input into the use of technologies that help deliver regulatory requirements more efficiently.
Pointing to the interest in the area from the industry, the FCA said it received an “outstanding” response, with more than 350 comments from technology suppliers, financial service organisations and consultancies.
Having analysed the feedback, which called for the FCA to play a more active role in moving regulation from the old technology world to the new, the City watchdog has now decided how it will tackle the issue of ‘regtech’ as part of its broader work on the use of financial technology - fintech.
“We agree with the sentiment that the FCA has an active role to play in regtech,” the report read.
“We intend to concentrate our efforts on increasing our engagement and collaboration with the regtech community, using our convening authority to help bring together market participants to work on shared challenges; and to act as a catalyst for change that helps to unlock the potential benefits of technology innovation.
“There is also a potential, but limited, role for the regulator to play in supporting the industry to define standards and guidelines in order to provide more certainty for firms purchasing new technology capabilities.”
Some responses to the call for input said uncertainty over regulations, the stance of the regulator and credibility of unproven technology, was making firms cautious about adopting regtech more widely.
Respondents felt that legislation had placed restrictions on accessing, processing and storing data, which, combined with a lack of accompanying standards, was impeding the development and adoption of new technologies.
Suggestions included defining new regulations in a machine readable format, greater consistency and compatibility of regulations internationally and establishing a common global regulatory taxonomy.
However, the FCA pointed out there are limitations to the role it could play.
“The complexity, scale and diversity of legacy infrastructure and existing systems within some financial services firms, makes the implementation of new technologies challenging,” the report stated.
“That some firms will continue to choose to invest in legacy systems rather than new technologies is a matter for their leadership, not the regulator.”
The FCA has been looking at the issue of technology in financial services since October 2014 when it launched Project Innovate, a scheme to encourage innovation in the sector for the benefit of consumers by helping companies launch new business types.