Britain’s Financial Conduct Authority has defended its decision to award a short-term data analytics contract to Palantir Technologies, telling lawmakers on Tuesday that the company will not have access to sensitive regulatory intelligence despite mounting political scrutiny.

According to Reuters, the US firm has been granted a 12-week contract to analyse internal FCA data to help combat financial crime. The arrangement has prompted questions from members of the parliamentary Treasury committee about whether Palantir could gain access to confidential information and whether its growing presence in UK public sector contracts risks market dominance.

Jessica Rusu, the FCA’s chief data, information and intelligence officer, said the procurement process had been conducted “blind”, meaning officials did not know the identity of the winning bidder until completion. She added that Palantir would act strictly as a data processor and that the US CLOUD Act would not apply to the arrangement.

During the same session, Conservative lawmaker John Glen questioned whether safeguards were in place to prevent overreliance on a single supplier, asking: “Is there anything that can be done to ensure they don’t become a monopoly?” His remarks reflect broader unease in Westminster about the concentration of government technology contracts among a small group of providers.

The Guardian reported that opposition politicians have called for the contract to be halted, citing concerns over data security and Palantir’s political associations. Daisy Cooper, the Liberal Democrats’ Treasury spokesperson, said awarding such work to the company “seems like a huge error of judgment”, while Green MP Siân Berry argued firms like Palantir “should have no place within UK government systems”.

FCA chief executive Nikhil Rathi defended the decision, acknowledging what he described as “a big strategic question” around the role of large technology firms in public functions. He said: “We also want to be the most effective enforcer against financial crime and money laundering, and that requires us to use data intelligence more effectively and use best-in-class tools.”

The regulator has said it will retain control over encryption keys and ensure data remains hosted in the UK, with Palantir required to delete information after the trial. It also maintains that the contract does not involve access to live trading records and carries no risk of long-term vendor lock-in.

A spokesperson for Palantir said the company was “proud” to support the FCA’s work, adding that its software can only be used “in strict accordance with the instructions of the customer” and that data cannot be commercialised.

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