The financial services industry is moving from the era of digitisation - services moving online - to a truly digital industry, drawing on artificial intelligence (AI) and machine learning, according to the Financial Conduct Authority’s executive director of strategy and competition.

Speaking today at a City of London and Cicero event on the future of regulation, he explained that this digital transformation is reflected in the new products finding their way direct to consumers over the internet – “some good, some bad, some downright fraudulent”.

He made the point that regulation has to keep up with changes in the industry, acknowledging that “the world we live in is very different world to the one in which our rules were framed”.

Woolard continued that it is vital that the FCA’s approach has the confidence and consent of industry stakeholders and the wider public.

“So over the coming months we will be engaging in a public conversation,” he stated. “We will be issuing an open invitation for your thoughts and ideas, as well as setting out some of our own, and we’ll publish detailed papers, including an analysis of future market dynamics, a discussion paper about our principles, and a consultation paper on the duty of care.”

Later in his speech, Woolard broached the subject of the opportunity presented by technology to bridge the information asymmetry between customers and providers.

“Much of our handbook is technology neutral, and we have enabled innovation over the last few years – but our rules feel increasingly analogue in a digital world,” he stated, noting that many practices firms use are simply digitised versions of analogue processes - like PDF statements - rather than truly digital services.

“Technology may help us deliver solutions that meet customer needs,” said Woolard. “On disclosure, for example, we could improve consumer understanding through a two-way process using a mobile phone, testing that understanding throughout the sales process.

“All of this amounts to a new approach where rules are designed to fit the end-purpose they serve - outcomes-based regulation - simply put, our aim is to be a regulator fit for the age we’re in.”

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