The Chairman of the UK Financial Conduct Authority (FCA), John Griffiths-Jones, has delivered a speech in which he talked about conduct rules in the FinTech era. At the Cambridge Judge Business School on 13 February 2017, he talked about current regulatory models being too detailed to keep pace with the emergence of new financial technologies, leaving regulators struggling to cope with the way financial services are delivered.
He said “Rules that were designed for the paperwork era do not work necessarily for the online one. The distinction between advice and guidance, once reasonably clear, has become much greyer with the advent of platforms and the potential of robo-advice. High frequency trading is a million miles from open outcry trading on an exchange. Artificial Intelligence puts the pooling of risk via insurance under pressure as individual odds become increasingly forecastable. An additional challenge comes from the differential pace of take up of new ways of doing things by the general public…”.
Adding “There is no silver bullet for this state of affairs, it is for a good regulator to keep up and cope with change. The financial sector may have something to learn here from other regulators – telecoms and pharmaceuticals come to mind. The FCA is seeking to embrace technical developments through its Project Innovate and Sandbox initiatives. We have come to realise that the more detailed regulation that we have the greater is the challenge of keeping it all current.”.