UK Financial Conduct Authority Outlines Future of UK Digital Regulation

The U.K. Financial Conduct Authority's Chief Executive, Nikhil Rathi, gave a speech on April 22, 2024, setting out the priorities of the Digital Regulation Cooperation Forum. The DRCF brings together the FCA, the Competition and Markets Authority, the Information Commissioner's Office and Ofcom to facilitate collaboration on digital regulation. Key areas of focus will include:

• launching an AI and Digital Hub to provide informal advice to tech innovators, helping them to bring products to market;
• researching digital identity;
• further work on the issue of Big Tech and data asymmetry. In April 2024, the FCA published a response to its call for input on potential competition impacts from the data asymmetry between Big Tech firms and firms in financial services. Big Tech firms have access to a large user base and significant volumes of user data which could enable them to entrench their market power. In his speech, Nikhil Rathi confirmed that the DRCF would work with industry to determine how Big Tech data could be used to improve financial services and to explore incentives for data sharing. It would also work with the Payment Systems Regulator to understand competition problems associated with digital wallets;
• supporting the adoption of responsible AI through the AI and Digital Hub and conducting research into the use and understanding of generative AI by consumers. The FCA recently published an AI Update on its approach to AI and is considering how it can collaborate further with overseas authorities to respond to the challenges presented by AI.

The FCA's consultation on its new approach to enforcement and publication of enforcement investigations will also apply to firms operating in digital markets, to support the regulators' intention to boost transparency and accountability.

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