Time is running wild in the financial services sector at present. New products and entrants are coming to the market hastily, some of which do not currently but will, in the near future, fall under the watchful eye of the Financial Conduct Authority (FCA). As a result, change is nigh for everybody involved in financial services.

Such change is predominantly (and unsurprisingly) being driven by digital innovations and the importance of data. It should be embraced but perhaps one of the biggest challenges to all of this is understanding. Will firms understand what the FCA expects of them? Will consumers truly understand the workings of these new products? And will the FCA’s regulatory regime be workable in this new age of financial services?

The FCA is turning to face these changes head on. On 22 September 2021, building on the speech he delivered on the FCA’s Business Plan back in July 2021, Nikhil Rathi, the CEO of the FCA, announced that it would be working with the Bank of England on a Digital Regulatory Reporting Initiative to address the ever-increasing costs of compliance checks. Such checks are said to cost anywhere between £1.5bn and £4bn. Rathi declared: "By connecting to firms through blockchain and API technology and implementing machine readable and executable regulation, compliance checks can be completed in near real time." This will be music to the ears of many firms.  

The FCA is also pressing ahead with its expansion plans, with a particular emphasis on recruiting data scientists and analysts, which will no doubt build on the work it is doing through its involvement in the Digital Regulators Cooperation Forum (DRCF), a partnership with Ofcom, the Information Commissioner’s Office and the Competition and Markets Authority.

All in all, Nikhil Rathi’s speech was promising and perhaps a statement of intent that the FCA can indeed operate in the digital age and will, with the cooperation of others, including those it regulates, be able to keep up with the pace of change.