The National Audit Office has launched an investigation into the Financial Conduct Authority’s effectiveness and ability to manage a growing list of responsibilities, including the overseeing of online fraud, crypto and risks surrounding artificial intelligence.
The review is understood to include examining the FCA’s governance, strategy and culture as well as its approach to regulating diverse types of firms and markets.
Additional areas for the investigation include the use of data and intelligence to identify and address risks and its effectiveness in achieving its statutory objectives and delivering public value.
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.
“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,” said Dr Henry Balani, global head of regulatory affairs at Encompass Corporation.
“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, said: “The FCA plays a 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.”