The FCA (Financial Conduct Authority) recently published its first annual Perimeter Report, in which it comments on the limits of its responsibilities towards the UK citizens. The British regulator also outlined those limits, explaining that there are boundaries to what it can do in order to protect an average citizen.
According to the FCA, there seem to be many in the UK who might be wondering whether the regulatory body is doing everything in its power to prevent certain incidents and problems. The regulator’s new report, issued only yesterday, June 19th, explains why some incidents are inevitable.
The financial watchdog thought it best to describe the situation through a colorful example. They attempted to explain it through the case of a vet and pet insurance. The explanation states that the FCA can and will govern the insurance service, but it cannot do much if the vet is doing a poor job while providing care to animals.
In other words, there are situations that FCA cannot cover, and this is true for numerous industries and different instances. The regulator’s reach has its limits, and they cannot do much about the things that go beyond those limits.
However, another part of the report that many might find more interesting is the FCA’s plans regarding retail trading products and fintech firms. One area where the regulator believes it should have more influence is control over ISPs or Internet Service Providers. They seem to be particularly concerned when it comes to fraudulent materials and their removal.
The FCA’s struggle with fraudulent ads, foreign brokers, and cryptocurrencies
The FCA stated that social media ads instantly reach millions of people through the internet. This poses a problem for the regulator which needs to be able to detect misleading ads and act against them. Until now, the regulator would rely on traditional media’s collaboration when it comes to removing the ads that the FCA might deem inappropriate, fraudulent, and alike. However, this is difficult to achieve when it comes to ISPs.
The regulator seems to be genuinely concerned about fraudulent ads, and in addition to seeking greater control over internet providers, it is also working on creating additional tools. These would be automated tools, which can identify fraudulent marketing materials and ads.
Next, the report also spoke about retail products, especially when it comes to binary options, which are sold by foreign brokers. The agency keeps a close eye on the companies that do this, as well as dangers which may come from such behavior. Further, they regularly update their warning list in regards to such firms and their products.
The company points out that doing something about this is a difficult task, and that it is closely involved with several initiatives to better align international approaches to regulatory issues and common policy.
As their final point, the FCA spoke of the problems in regards to digital currencies. They weren’t that cryptocurrencies are often intangible and that their nature is multi-functional, which makes them extremely difficult to regulate. The agency also admitted that its existing powers might not be capable of dealing with this particular asset class.