FCA chairman says FinTech has exacerbated challenges for regulators

Technology has created grey areas regulators are now forced to navigate.

The rise of technology in capital markets has exacerbated challenges for regulators, according to the chairman of the UK’s Financial Conduct Authority (FCA), John Griffith Jones.

In a speech to students at the Cambridge Judge Business School, Jones explained the “remorseless march of technology” has made it harder for regulators to define parameters, firms, products and services covered by regulation.

“The distinction between advice and guidance, once reasonably clear, has become much greyer with the advent of platforms and the potential of robo-advice,” he said.

“Rules that were designed for the paperwork era do not work necessarily for the online one…  High frequency trading is a million miles from open outcry trading on an exchange.”

Jones added an additional challenge comes from the differential pace of take up of new ways of doing things.

“There is no silver bullet for this state of affairs, it is for a good regulator to keep up and cope with change,” he said.

“The FCA is seeking to embrace technical developments… We have come to realise that the more detailed regulation that we have the greater is the challenge of keeping it all current.”

Jones reiterated the FCA has a strategic objective to ensure markets work well, which is supported by three operational objectives of protecting consumers, promoting competition and enhancing integrity.