The Financial Conduct Authority has pledged to increase investment in its digital capabilities, to help tackle regulatory reports which cost up to £4bn a year.
FCA chief executive Nikhil Rathi set out the plans in a speech at the annual Lord Mayor’s banquet at Mansion House yesterday (22 September).
He said the FCA would invest £120m over three years to maximise its move to the cloud.
“We anticipate, particularly as we explore expansion into a new Leeds office, hiring significantly more data scientists and data analysts,” he added.
“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.”
He said as the FCA will increasingly be called upon to regulate more data-heavy businesses. “As demand for data increases, firms may be able to use, market or restrict data in ways which create poor user outcomes,” he added.
“Our wholesale data call for input showed that some market participants believe trading data licensing fees are too complex, benchmark switching costs too high and data vendors are subject to high barriers to market entry.
“We’ll be publishing feedback before the end of the year and setting out what further steps we may take, considering the full range of our powers.”
Rathi, who took over from Andrew Bailey last October, wants the FCA to become “more assertive” in the way it does things.
He said: “We have often been criticised for acting slowly or with too much risk aversion. This is changing. 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.
“We have a good dialogue with Government and will be publishing our third annual perimeter report next month, sharing our 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.”
Rathi noted that the regulator is collaborating with international partners to deliver a world without the London Inter-Bank Offered Rate (LIBOR), transition to a net-zero economy and maintain high regulatory standards.
He added: “We are changing listing rules to ensure investor protection but also support new sectors and new forms of capital raising – the first reforms came in August, more will follow later this year and next.
“This will help build on what has been a record year in capital raising in UK markets for UK and global companies of all sizes, particularly in the technology sector.”
