The “remorseless march of technology” has made the line between advice and guidance harder to distinguish, the chairman of the Financial Conduct Authority has said.
Speaking at the Cambridge Judge Business School last night, John Griffith Jones said this had also made it harder for regulators to determine what areas they cover.
He said the FCA is seeking to embrace technological developments through initiatives such as Project Innovate and the Sandbox.
Mr Griffith Jones said: “The question of the perimeter, what firms, what transactions and which products or services are covered by regulation has proved more problematic than you might have expected.
“The problem is exacerbated further by the remorseless march of technology. Rules that were designed for the paperwork era do not work necessarily for the online one.
“The distinction between advice and guidance, once reasonably clear, has become much greyer with the advent of platforms and the potential of robo-advice.
“High frequency trading is a million miles from open outcry trading on an exchange.
“Artificial Intelligence puts the pooling of risk via insurance under pressure as individual odds become increasingly forecastable.”
He said this problem was made even harder because different sections of the public take up technology at different paces.
For example children might have little or no experience of cheques but some people might be uncomfortable with online banking.
He said: “There is no silver bullet for this state of affairs, it is for a good regulator to keep up and cope with change.”
Mr Griffith Jones said that in recent years the FCA had seen plenty of change because of changing government policy and warned there would be more on the horizon following Britain’s vote to leave the European Union.
He said: “The Government decides to change the pensions regime, the regulatory regime must follow suit. The Government wants a cap on the cost of pay day loans, the regulator is asked to implement one.
“With Brexit in train, we should not seek to hide from change rather than co-opt it, and clarify its impact on the regulatory regime as quickly as is possible.”