Nikhil Rathi, chief executive of the Financial Conduct Authority (FCA), set out the regulator's new data-led regulation approach, highlighting its stance on green financing, workplace diversity and the upcoming consumer duty rules, in a speech in the US.
In a speech, delivered on 14 July at the Peterson Institute for International Economics, Rathi pointed to the need for "a different type of regulator" and the ways in which the FCA was innovating to become one.
He said that the FCA had redesigned its operational platform to "better adapt and collaborate, to address the threats, mitigate the shocks, and embrace opportunities," before pointing to its recently updated data strategy to tackle online scams.
Last month the FCA announced that it scans about 100,000 websites created daily to identify those that appear to be scams, and uses advanced analytics and new sources of data helps to identify inappropriate financial adverts.
The FCA has also moved some of its core systems to the cloud, enabling the transfer of more than 50,000 firms and tens of thousands of users to a new regulatory data platform, he said.
"We are examining what potential systemic risks are posed by our financial services sector relying upon the resilience of services provided by a small number of critical third parties - including cloud providers - and will soon publish a joint discussion paper with the Bank of England setting out potential new measures."
The CEO also said that the FCA was embarking on a new approach to digital regulation through its Digital Regulators Cooperation Forum and that it had secured an agreement from Google to prevent non-FCA verified firms to advertise financial products on its platform.
ESG
In addition, he emphasised the regulator's commitment to supporting the financial sector's transition to net zero, and that "the UK was the first major economy to mandate climate-related disclosures".
He also confirmed the Sustainability Disclosure Requirements (SDR) will be published later this year, and the FCA's support for regulating ESG data and ratings towards "enhancing transparency and promoting stronger governance".
"In the UK, we are now working closely with the Treasury as they consider extending our remit to cover such providers," he added.
Workplace diversity
Touching upon workplace diversity, Rathi said the FCA had recently finalised rules that will mandate listed companies to report on their diversity at board and executive management level, including that at least 40% of the members of the board are women, at least one of the senior board positions is a woman and at least one member of the board is from a non-white, minority ethnic background.
"We have set even higher standards for our own organisation and will give an update on how we are doing later this summer - but we are well on the way to meet our target for a gender balanced Senior Leadership Team by 2025."
Consumer duty
Rathi highlighted the FCA's outcomes-focussed approach with the upcoming consumer duty regulation which seeks to ensure all firms take account of "the actual impact" of their services and product suitability on the consumer.
"Those firms who do the right thing and show leadership should welcome action to tackle competitors who drive down standards, and we anticipate fewer rule changes as a result, lowering costs to good firms operating in the UK."
Finally, he called for more international collaboration to seize global opportunities.
