The Financial Conduct Authority is particularly interested in using technology to improve regulatory reporting and data sharing, Christopher Woolard has said.
The regulator’s director of strategy and competition made the comments while speaking at London Fintech Week last week.
He said billions of pounds are spent every year on the business of regulation, while tens of thousands of people in the UK alone are employed in compliance to implement anti-money laundering controls but the FCA wants to find out if this can be done better.
“High costs and inefficient processes can be both a barrier to competition and result in costs passed to consumers,” commented Mr Woolard.
“We have a particular interest in working with those involved in developing technologies to improve regulatory reporting and data sharing – both between firms and between regulated firms and the regulator – and in making our handbook more accessible.”
But he added that many of the technologies that firms use to interact with consumers can also be used to help the FCA work better with the firms it regulates.
It is also interested in making the business of complying with reporting requirements simpler, by trying to close the gap between the intention of regulatory requirements and its interpretation by firms.
Earlier this month the FCA published a feedback statement, following its November call for input into the use of technology that helps deliver regulatory requirements more efficiently.
This stated it would play an active role in the development of regulatory technology after an “outstanding response” to a consultation on the issue.
Mr Woolard gave anti-money laundering controls as an example of an area that could benefit from ‘regtech’.
He said many of the challenges associated with the anti-money laundering regime, and the burdens it imposed, relate to the due diligence checks, with a perception that these checks are a barrier to business, innovation and, ultimately, competition.
“Today’s AML regime was mainly developed in the 1990s, and while it does recognise digital identity, the way that many firms have put it into practice can make it feel paper-based,” admitted Mr Woolard.
“This is an area that concerns us and we would like to see innovative methods being deployed by financial services firms.”
Jeremy Edwards, a partner with Martin Redman Partners, said: “Using technology to make it easier to interact with the regulator sounds like an excellent idea but the FCA’s activities in the past have not been great.
“These things are wonderful but getting them to work seemlessly can be quite difficult.”