The Financial Conduct Authority (FCA) has published its Business Plan for 2018/19, setting out several pieces of regulatory work in the FinTech sector.

The regulator stated that it intends to respond to the Treasury Committee’s enquiry into cryptocurrencies, although it noted they are not currently within the FCA’s regulatory perimeter. “However, some models of use or packaging cryptocurrencies bring them within our perimeter, making the landscape complex,” the document added.

Last year, the FCA issued consumer warnings on cryptocurrency Contracts for Difference and the risks of Initial Coin Offerings (ICOs). “We will work with the Bank of England and the Treasury as part of a taskforce to develop thinking and publish a Discussion Paper later this year outlining our policy thinking on cryptocurrencies,” the Business Plan promised.

Addressing the review into retail banking business models - focused on the differences between emerging and traditional retail banking business models - the FCA stated it particularly wants to understand what impact the growing use of digital channels and declining use of branches is having on business models and the implications of this for consumers.

“We are analysing the information we have collected from retail banks. We will publish an update in the first half of 2018, explaining the results of this preliminary analysis and our proposed next steps.”

In terms of the emerging area of RegTech - new technologies developed to help overcome regulatory challenges faced by financial services firms - in 2018/19 the FCA will take forward work to deliver cost savings, both for firms submitting regulatory returns and how this information is used.

In the summer, the regulator said it will publish a feedback statement that brings together the results of its Call for Input made at the beginning of 2018 and the proof of concept developed during its November 2017 TechSprint.

Some of the experiments being conducted with advanced analytics over this year include:

• Automated detection of unauthorised business activity on the internet through new technologies.
• Testing advanced Natural Language Processing (NLP) technologies and semantic language models in an effort to automate what would otherwise be manual supervisory tasks.
• Automated evaluation and detection of misleading advertising.

Over the coming year, the FCA plans to look at the lessons learned since the FinTech sandbox was created in 2016.

“We are hearing from firms that there is real value in being able to operate globally,” read the Business Plan. “This would involve working with other regulators across the globe to conduct tests in different jurisdictions at the same time… over the next few months we will work with interested regulators on a blueprint of the global sandbox.”

The FCA added that it will look at metrics - such as the number of new entrants to the market and the emergence of new innovative products to meet consumer needs - to see whether FinTech is helping to improve competition in the interest of consumers.

Finally, in terms of the crowdfunding sector, the FCA has been working on additional rules to address areas of concern, in particular for loan-based crowdfunding, with proposed new rules due to be finalised and published for consultation later this year.

Andrew Bailey, the FCA’s chief executive, commented that this year the regulator will need to dedicate a significant amount of resource to withdrawal from the EU. “As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm.”

Share Story: