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Financial Conduct Authority publishes its response to work on big tech and data asymmetry in financial services

Watch techUK’s Head of Financial Services, Andy Thornley, explain the FCA’s response to their work on big tech and data asymmetry in financial services!

On 22 April, we hosted the Digital Regulation Cooperation Forum at a techUK conference where their Chair and CEO of the Financial Conduct Authority (FCA), Nikhil Rathi, announced in a speech, the publication of a feedback statement following their work on potential data asymmetry in Financial Services.

The first finding from this work was there were no current significant harms they found of data asymmetry with regards to so-called Big Tech within financial services. Financial Services firms had believed there was value to the data Big Tech firms hold within the sector; however, they were unable to demonstrate this.

Whilst there was no consumer harm or current competition issues they found, the regulator did set out four further steps they will take with regards to possible or perceived data asymmetry:

  1. The FCA will continue to monitor the situation and activities with regards to so-called Big Tech’s expansion into the financial services sector.
  2. The FCA will attempt to identify usecases for the data held by so-called Big Tech through sandboxes and will consider the data in the context of Open Finance with regards to the Competition and Markets Authority and the role they will play through the Digital Markets, Competition and Consumers Bill.
  3. If the FCA sees value in the data held by so-called Big Tech through step 2, they will investigate incentives for this to be shared with other market participants.
  4. The FCA will collaborate with the Payment Systems Regulator with regards to the potential risks and opportunities of digital wallets, including through the lens of Open Finance.

Finally, the FCA also set out they will revisit the financial model behind how Open Banking is funded following concerns from some in the banking sector that technology firms are utilising data but not contributing to the cost.

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