The Financial Conduct Authority has once again pledged to become a data-led regulator and will invest millions of pounds to achieve this.
Speaking at the annual city banquet at Mansion House yesterday (September 22), FCA chief executive Nikhil Rathi said the regulator's digital transformation would involve tackling regulatory reports which were costing "between £1.5bn to £4bn a year".
He said: “As we accelerate our goal of becoming a data and digital first regulator, this means increasing investment in our own capabilities, £120m over three years to maximise our move to the cloud.
“We anticipate, particularly as we explore expansion into a new Leeds office, hiring significantly more data scientists and data analysts.
"Regulatory reports are estimated to cost between £1.5bn to £4bn a year, with 20,000 rules across 58,000 firms.
“That’s why we’re working with the Bank of England on the Digital Regulatory Reporting Initiative.
“By connecting to firms through blockchain and API technology and implementing machine readable and executable regulation, compliance checks can be completed in near real time."
As set out in July, Rathi explained that in the future, the FCA will be a regulator that:
- tests powers to their limits, to ensure market integrity;
- continues to anchor to and shape international standards;
- over time will become as much a data regulator as a financial one.
“We have often been criticised for acting slowly or with too much risk aversion. This is changing,” he said.
“We are applying a bolder risk appetite in dealing with serious misconduct, including, as you will have seen, using criminal powers in the most serious cases involving financial crime or money laundering.
“We will litigate more if we need to, recognising we won’t win every aspect of every case but also appreciating that legal certainty can provide considerable benefits for industry as well.”
Rathi said the regulator had “a good dialogue” with the government and will be publishing its third annual perimeter report next month, sharing views on how the regulatory framework might evolve.
“This meets our commitment to Parliament, a key mechanism of our accountability which will only intensify in the coming years.”
Work with us
Concluding his speech, the FCA boss turned to the industry as he requested them to work with the regulator to help it navigate through challenges such as Brexit and the pandemic.
He said: “Profound forces – the pandemic, Brexit, technological change, the drive to a greener economy, demographic shifts– are transforming financial services and society. Each of these forces present their own challenges and opportunities.
“So let me end with a request. Through open, timely dialogue, help us on this journey. Work with us to navigate the challenges. Help us ensure the UK remains a magnet for the best talent with a financial services industry that leads the way on diversity and inclusion. Partner with us to seize the opportunities.”
Rathi urged the industry to help fuel economic recovery and drive innovation that supports markets.
The call from the FCA boss comes as he approaches one year since he was appointed.