08Nov

The FCA’s Chief Information Officer explained in a speech how the regulator is making greater use of data and is aware of the threat posed by risky investments.

Jessica Rusu, the Financial Conduct Authority’s Chief Data, Information and Intelligence Officer, spoke at the CDO Exchange for Financial Services on November 2 about how the regulator is adapting to “drivers of change in the financial services industry.”

She summarised the FCA’s responsibilities in this area as:

To tackle the challenges faced by consumers and industry, we must make the best use of our own resources – connecting the dots in terms of intelligence across the organisation, drawing on strategies and approaches from data science, and leveraging data to create new tools and techniques which allow us to detect harm and intervene more quickly.

Some of the key points from her speech were:

  • The FCA needs to be a data-driven regulator, and this will allow it to gain “greater insights, more quickly”
  • The regulator must use “the same techniques as in industry to prevent harm, tackle poor practice, and support innovation and growth”
  • The FCA must become more adaptive, “constantly learning and adjusting in response to changes in consumer behaviour and market evolution”

Specifically regarding the “threat landscape”, she commented that:

  • A new breed of younger consumer has entered the investment landscape, often attracted by promises of high returns in high-risk areas such as cryptocurrency
  • Some people are attracted to this form of investment by social media influencers
  • Many investors fail to understand that these investments are not regulated by the FCA and not protected by the Financial Services Compensation Scheme

Ms Rusu said that the FCA is ensuring that social media platforms “are complying with laws that prevent communication of unregulated investments.” At the same time, the regulator is seeking to make the laws in this area stricter, such as campaigning for digital promotion of scams to be included in the Online Safety Bill.

Her next point was that, given the FCA regulates some 51,000 firms, information supplied by firms in data returns was vital in helping the regulator “to understand, prioritise, and intervene more effectively than ever before.”

On the subject of consumer protection, Ms Rusu said:

  • The FCA is using data to identify “paths to harm – the behaviours and events which we know are likely to end in consumer harm or markets failing to function.
  • Examples she gave include “the conditions that might give firms an incentive to pursue aggressive selling practices” and “the tactics a fraudulent seller might adopt before going on to set up a fraudulent investment programme”

Finally, the FCA CIO mentioned the Innovate and Sandbox initiatives, where firms have been able to test out their innovative ideas in real-world scenarios.

As mentioned in the speech, analysing information in data returns is one of the principal ways in which the FCA supervises many of the firms it authorises. At Scott Robert we understand that many firms find completing these data returns complex and time consuming, but we are able to assist you with every stage of the process of completing these returns. Speak to one of our experts today to find out more by calling 0161 914 5727.