The UK’s Financial Conduct Authority (FCA) director of strategy and competition has warned that technology is changing not only the markets the regulator regulates, but also the way in which they regulate.
Christopher Woolard says in a recent speech: ‘The argument about considering our use of technology to deliver better regulatory outcomes while managing the impact of our regulation fits closely with the wider questions on the future of regulation.
‘This is about considering some of the fundamentals of our regulation: our principles. Some argue that they should be replaced by – or supplemented with – a duty of care or duty of responsibility. Others, that the principles are sufficient as they are. Principles should be bedrocks, not something up for continual debate. But now seems the right time for us to consider how these function as part of our work on duty of care. This is part of a wider consideration of the impact our regulation has.’
Woolard says that to make sure the FCA has the skills to take on the challenges of the future, ‘we’re strengthening our focus on science, technology, engineering and math graduates to increase our capability in areas like cyber-security, data science and technology. Having this capability in-house will become increasingly important as we grapple with the huge ethical and social questions these new technologies bring up.’
In this way, Woolard notes that the FCA is using technology to assist in its work: ‘We’re increasingly employing machine-learning techniques to identify firms or individuals who could pose a risk to our objectives.’
Summing up the technological challenge, he adds: ‘The transformational challenges we’re living through, the ethical questions posed by new technologies… apply to the regulator as much as they do the regulated. As a forward-thinking, technology-driven regulator, we have to react to the world as it changes around us, but remember also what stays constant.’