“Data! Data Data! I can’t make bricks without clay.”
I don’t know if the authors of the FCA’s corporate documents are big Sherlock Holmes fans, but this quote from the Adventure of the Copper Beeches reflects the sentiment of the FCA’s business plan for 2024/25 published this week.
The plan is for the final year of its current three-year strategy, and although there are no real ‘rabbit out of the hat’ moments, it’s worth spending some time looking at what the regulator is prioritising and why.
It won’t come as a surprise to anyone that the first priority is Consumer Duty.
To emphasise this, less than 24 hours after the publication of the business plan, the thematic review of retirement income advice was published, following a good probing of around 1,000 advice firms.
The duty wasn’t in force when the files considered in the review were provided. But the FCA has been explicit that, based on those files, unless firms took some kind of action it’s unlikely that most would meet with some of the requirements of the Duty. Which is an alarm call for those firms who thought they didn’t need to change anything at all.
(You can read more lang cat thoughts about that particular review here.)
The importance of data
The second big priority reflects the FCA’s new competitiveness objective. ‘It’s a secondary objective!’ I hear from a chorus of voices in Stratford. ‘We have primary objectives first, including consumer protection!’
That said, the regulator still intends to contribute to UK competitiveness and growth by improving UK wholesale markets, and continuing to make it quicker and easier for firms to apply for authorisation. This presumably involves crunching data, and takes us on to the really interesting one – “becoming a world class data-led regulator”.
Putting aside for the moment that most people in the UK right now would probably settle for ‘functioning’ over ‘world class’ for most public sector organisations, there are signs that things are really moving forward at the FCA in the automation of analytics tools.
The objective is to help it detect and respond to consumer harms faster, and to identify problem firms earlier.
This could mean identifying problem firms, or individuals, at the authorisations gateway. This is something the regulator has not always managed in the past, leaving it open to allegations of failing to spot failed firms ‘phoenixing’ in new guises.
There’s also a acknowledgement that it will work with firms on the safe deployment of artificial intelligence.
Anyone who doubts the commitment of the FCA to data analytics and AI should have a look at its recruitment website. There’s been active recruitment for some time in data expertise, and currently they are filling up a newly-formed intelligence development and analysis team with manager roles offered at above market-rate salaries.
It’s unlikely that the regulator will be replaced by ChatGPT any time soon, but given the vast amount of data the FCA collects itself, holds, or can access readily, as Sherlock might put it, it looks like the bricks in the regulatory wall are starting to take shape.
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