The Financial Conduct Authority (FCA) has published its Research Agenda for the 2019/20 financial year. It says of this exercise:

“We combine economics, statistics, behavioural science, and market data and intelligence together with newer techniques in machine learning and artificial intelligence to understand how markets work, and how we can make them work better.”

The FCA acknowledges that there will always be emerging trends and new market developments, and that it will always aim to keep up to date with these, and to be a forward-looking regulator.

The regulator says that, in the main, its research interests can be allocated to one or more of five distinct themes:

  • Household finance and consumer behaviour
  • Securities markets: microstructure, integrity and stability
  • Competition, innovation, and firm behaviour and culture
  • Technology, big data, and artificial intelligence
  • Regulatory efficiency and effectiveness

In the household finance area, the FCA wants to understand:

  • The impact of student debt on later-life outcomes
  • How intergenerational issues affect the housing markets
  • The extent of the retirement savings gap
  • The rise in income volatility caused by an increase in flexible working
  • How consumers make decisions to borrow money, which consumers are most likely to experience a debt problem and what the broader consequences of being in debt will be
  • How consumers make decisions about how to access their retirement savings, noting that just 52% of UK adults with a defined contribution pension had read their annual statements, and 20% of those who had read them did not understand them
  • What might cause certain consumers to become vulnerable, the extent to which vulnerability leads to poor outcomes for consumers and the effectiveness of potential interventions in this area

Regarding competition, innovation, firm behaviour and culture, the FCA wants to:

  • Understand the scale and impact of the growing trend of firms using technology and big data to set prices
  • Know what are the biggest factors in determining a firm’s culture, e.g. incentives, firm structure, the example set by senior management, the example set by middle management
  • Establish to what extent there is a link between diversity, culture and conduct within firms

In the technology area, the FCA will:

  • Examine how the use of technology, big data and artificial intelligence is affecting competition
  • Consider if technological advances will allow the regulator to use more accurate risk models. These improved models will then help prioritise its regulatory efforts, allow it to gain insights into firm behaviour and market outcomes, and hopefully allow it to intervene earlier

The regulator says it will be organising research conferences and seminars on some of the themes discussed in the Research Agenda, and interested parties are invited to contact the FCA via Research.Agenda@fca.org.uk for further information.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article