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  • Julien Haye

Fighting Fire with Fire: How the FCA Uses Innovation and AI to Protect Consumers

How the Financial Conduct Authority uses innovation and artificial intelligence

Never before have we seen so clearly the convergence in Finance, Tech, Innovation, and AI as we have seen these past few months. Advances in technology, changes in consumer behaviour, and macro shifts in market stability mean that regulators must keep pace with these changes, fighting fire with fire.

Jessica Rusu, the FCA's Chief Data, Information and Intelligence Officer


The financial services industry is undergoing a massive digital transformation, with the use of data and technology transforming the way consumers interact with financial products and services. This transformation is bringing with it new challenges for regulators, who need to balance innovation with consumer protection.


At the forefront of this transformation is the Financial Conduct Authority (FCA), the UK's financial regulator, which is using innovation and artificial intelligence (AI) to protect consumers, enable growth, and transform operations. In a recent speech at the Innovate Finance Global Summit, Jessica Rusu, the FCA's Chief Data, Information and Intelligence Officer, spoke about the FCA's efforts to leverage data and innovation to address the challenges of reducing firm burden, promoting interoperability, and exploiting the masses of data collected.


We’re laser focused on this topic because as the demand for ESG-related products and services continues to grow, so does the risk of firms potentially overstating their sustainability credentials to attract customers and investors.

Rusu emphasises the FCA's initiatives to leverage data and innovation to protect consumers, enable growth, and transform operations while reducing firm burden and promoting interoperability.


Rusu's speech demonstrates the FCA's commitment to supporting new firm entrants delivering positive consumer outcomes throughout the financial services market. The FCA's refreshed Innovation program, including TechSprints, PolicySprints, and Innovation Pathways service, aims to help financial service firms understand and comply with regulations, while also enabling them to innovate and develop new solutions that benefit consumers.


Moreover, the creation of the Digital Sandbox service provides a platform for firms and innovators to test their products and services in a controlled environment, using synthetic transaction and market data, combined with over 200 data assets. This initiative is an example of the FCA's willingness to work with other stakeholders, including academics, government bodies, venture capitalists, and charities, to promote innovation and digital transformation in the financial services industry. Such collaboration also enables regulatory bodies to learn and guide market participants as they adopt such technologies.


In many ways AI sits at the core of Innovation and underpins many new and transformed business models. The opportunities for AI are enormous, particularly when combined with Quantum computing. But the risks require careful consideration, including Data Bias, Model Risk, as well as Outcomes-based monitoring implications.

Overall, Rusu's speech highlights the FCA's efforts to create a regulatory environment that fosters innovation, promotes consumer protection, and supports the growth of the financial services industry through digital transformation. As such, her speech is of interest to anyone working in or following developments in the financial services industry, especially those involved in innovation, technology, and data.

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