Financial Conduct Authority (FCA) chair Ashley Alder has emphasised the regulator's commitment to open markets and the continued importance of cooperation with its EU counterparts.

During a speech at the UK Mission to the European Union on Monday, Alder said that the UK and EU needed to continue to cooperate against a backdrop of “turmoil we are all attempting to navigate” such as the current conflicts in Europe and the Middle East, the climate crisis, and the ongoing “economic drag” of Covid.

Noting that some view expansion of trade as a good thing, he said that others agree that there should be greater barriers on imported ‘foreign’ goods and services.

The FCA chair warned this duality vividly illustrates some fundamental tensions which could even impact the effectiveness of the regulators of global financial activity.

“The FCA’s primary statutory objectives are to enhance market integrity, promote competition and protect consumers,” Alder said. “Each objective is fully aligned with an open markets philosophy where healthy competition lowers costs for consumers and high, consistent and proportionate standards reduce unnecessary, expensive frictions across the financial services landscape.”

Citing UK legislation passed last July to give the UK a new, explicit secondary objective to pursue the UK’s international competitiveness and growth, Alder went on to note that the objective should not imply isolationism or a dialling back on its commitment to cooperation and open global markets.

“In an interconnected global economy dependent on international investment, the FCA knows that it can’t achieve its consumer, market integrity and competition objectives alone,” he continued. “We have made clear that cooperation around international standards and cross-border collaboration is closely tied to efficient capital formation and greater productivity.”

Alder proceeded to share several examples of how the FCA has gone about shaping the UK’s role in fostering open and competitive global economies with commitments towards finding consistent international responses to challenges that increasingly give rise to cross-border risks.

In January, the UK Government announced its decision that EU states are deemed equivalent to the UK under the Overseas Funds Regime. The decision means EU undertaking for collective investment in transferable securities (UCITS) funds can now be marketed to UK retail investors.

“As with any properly implemented equivalence regime it also ensures that foreign funds sold to UK investors meet high standards of transparency, investor protection, and regulatory oversight,” Alder said. “My hope is this initiative could be a pathfinder for additional findings of equivalence in years to come, to include principles of reciprocity.”

Addressing FinTechs, Alder went on to state that the failure of Silicon Valley Bank and other problems with banks last year was a prime illustration of how technology had massively accelerated the speed at which bank runs can develop.

“Important questions are also being asked about the evolving role of Big Tech and social media across financial services,” he said. “For example, last November the FCA issued a call for input about the way in which big tech firms could gain advantages from their digital activities when they combine core business data with financial information sourced from different data sharing mechanisms.”

Coming back to the importance of open market collaboration, Alder cautioned that a handful of BigTech companies have already achieved “unprecedented global reach” which indicates that incentives for regulators to learn from each other and pursue common approaches has become “hugely compelling”.

“Here I’ll just point to the UK’s recent proposals enabling financial regulators to directly regulate how BigTech firms provide critical services to financial firms, such as cloud storage,” he said. “This is a good indication of how our remit is likely to expand into sectors which have not traditionally been classed as financial services.”

Closing out his speech, Alder emphasised the importance for the UK and EU to lead by example.

“You should naturally expect that the FCA will take full advantage of its ability to pursue a major reform programme to tailor financial services regulation to suit UK markets, using powers newly given to us in legislation passed last July,” he said. “But in doing so we recognise that in key areas the EU and UK are pursuing similar reforms which, although not identical, signal common causes.”

Alder concluded: “We may have left the EU, but the ties that bind the UK and Europe together - economic, cultural and relationships forged over decades - remain incredibly strong.”

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