FCA to investigate impact of Big Tech
The Financial Conduct Authority (FCA) is launching a discussion into the impact that Big Tech is having on the financial services industry, in order to better assess the benefits and risks for retail consumers.
The regulator will be looking particularly at the effect of Big Tech on consumer credit, as well as payments, deposit taking and insurance.
“In recent years, Big Tech’s entry into financial services, in the UK and elsewhere, has demonstrated their potential to disrupt established markets, drive innovation and reduce costs for consumers,” said Sheldon Mills, executive director of consumers and competition.
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“Across the world, we’ve seen the capability of Big Tech to offer transformative new products in areas such as payments, deposits and consumer credit.
“We want to make sure that these benefits are fully realised while, at the same time, ensuring good consumer and market outcomes. This is vital when we consider the role of Big Tech firms in the provision of key technological infrastructure like cloud services.”
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Mills added that the FCA is not currently planning any regulatory changes at this stage, but the discussion will “inform the FCA’s pro-competitive approach to digital markets”.
Consumers, firms and other regulators are being encouraged to join the conversation.
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Former FCA chief executive Chris Woolard said that the review is “no surprise” and suggested that the regulator may look more closely at emerging trends such as embedded finance.
“It’s no surprise to see the FCA take interest in the impact of Big Tech given its critical role in the infrastructure of the financial services industry, and as a source of competition to established financial services,” said Woolard, who is now EMEIA financial services regulation leader at EY.
“Not only does Big Tech and fintech provide a major boost to growth and innovation within the financial services sector, it also increasingly raises new challenge.
“For example, the significant shift towards embedded finance – where non-financial companies embed financial services solutions into their existing offerings. It will be critical to ensure transactions are safe and secure and that regulation is keeping up as financial services are re-imagined and transformed.”