Simoney Kyriakou  

FCA needs more than data to anticipate harm

Simoney Kyriakou

Simoney Kyriakou

The Financial Conduct Authority has claimed that its new data-driven approach, which comprises a five-year strategy to transform the technology and improve the data sets it collects, will help it regulate better.

According to Christopher Woolard, executive director of strategy and competition at the FCA: “In keeping with our mission, a data-driven approach to regulation allows us to anticipate harms before they crystallise.”

The idea is to collate, interrogate and use data more efficiently and effectively to provide tougher, tighter regulation across the industry as well as to help predict areas of weakness and spot problems before they materialise.

If artificial intelligence can help various agencies detect terrorist activity before it happens, and medical devices can pick up early warnings of irregularities in our heartbeats, it stands to reason the financial regulator can use data to help it police the industry.

But can it be wholly effective? At the heart of the financial advice industry is people: a client/adviser relationship, which despite all the best robos in the world, still has not lost its value.

Despite all the hype over data efficiency and technological progress, people still need people, and to catch a human criminal, you need humans with knowledge and insight.

As the Chartered Insurance Institute warned last week: “Data alone isn’t enough to prevent future consumer detriment. It is vital data is accompanied by human insight to ensure developments in the market are fully understood.

“Digital breadcrumbs can’t replace the knowledge gained by speaking to those who assist customers.”

It also said that a desire to streamline data collection might mean different assets get treated the same, leading to an over-simplification of the market.

It seems people are still necessary, whether in advice or authority.