"Having a regulator fully equipped to serve a dynamic market with the use of AI and digital currencies surging is in all our interests"
The National Audit Office (NAO) has launched a new review into the FCA.
The NAO noted that recently, "significant changes have been introduced or proposed to the FCA’s regulation of the sector", including the Future Regulatory Framework, the new Consumer Duty rules, and a new proposed statutory secondary objective for the FCA to facilitate the international competitiveness and growth of the UK economy in the medium to long term.
Externally, the FCA was recently tasked with making sure cryptocurrency firms comply with money laundering rules, and by October it will be tasked with monitoring crypto-related adverts. Those responsibilities could expand as the government makes final decisions on how to regulate the wider sector.
The NAO says technological innovations such as cryptoassets and artificial intelligence "provide challenges and opportunities for regulation of financial services".
Its study will examine how the FCA is working with others, particularly the Treasury, to meet aspects of these challenges and take advantage of the opportunities posed by recent changes.
The last time the NAO investigated the FCA was in 2014, shortly after the regulator's creation.
Dr Henry Balani, Global Head of Regulatory Affairs at Encompass Corporation, commented: “Organisations like the FCA play a critical role in the development of the financial services industry, providing institutions with key guidance, as well as supporting them to operate at the highest standards. At a time when financial crime, particularly, remains a pertinent global issue, keeping up with the pace of change should be a top priority.
“This review represents a step forward and will help the FCA to fine tune its processes, improving operations and ensuring it is fully prepared to assist businesses in navigating an increasingly complex regulatory landscape."
Khalid Talukder, co-founder of DKK Partners, added: “The FCA plays crucial role in enabling the financial services industry to operate to the highest standards, but that shouldn’t mean that the regulator is above scrutiny. Working with the NAO will enable the FCA to initiate an independent review of its policies, procedures, and operational effectiveness, which is long overdue.
“Having a regulator fully equipped to serve a dynamic market with the use of AI and digital currencies surging is in all our interests and we welcome this announcement as a positive step forward for the industry."
An FCA spokesperson said: “We welcome the National Audit Office’s review of the FCA and how we adapt to change, as it could help us to ensure we continue to meet our objectives. We have a clear strategy in place about we want the FCA to be, and we are well under way to achieving that.”
