FCA looks to flip the script on Brexit dystopia

From AI, to cyber, to the climate crisis, the regulator is facing a mounting list of roadblocks

FCA looks to flip the script on Brexit dystopia

The FCA may be releasing a cinematic advert in tandem with the release of GameStop movie Dumb Money, but it was a 1954 classic dystopian novel that an FCA executive director looked to in a recent speech to capital markets leaders.

With the financial services watchdog firmly anchored on a post-Brexit UK, you can perhaps see why Sarah Pritchard, executive director – markets and executive director – international, sought to turn William Golding’s Lord of the Flies, in which a group of boys are shipwrecked on an island and unleash a Pandora’s Box of chaos, on its head.

Counteracting Goldman’s dystopic narrative, Pritchard looked to a 1965 case, in which six boys fled school in Tonga and washed up on an abandoned island, lasting 15 months without succumbing to violence or disorder until their rescue.

“As the six boys who were castaways on a south Pacific island showed, ground rules are the essential foundations for not just surviving but thriving,” Pritchard said.

Brexit was billed as a way of taking back control, and for the UK to forge its own path forwards, unencumbered by restrictive European Union rules and regulations. For the insurance industry, a more competitive regime is one big hoped for silver lining.

Innovation and competition must, though, be tempered with stability and confidence, lest the UK end up marooned and in need of rescue. As Pritchard put it regarding the overhaul of securitisation rules, the outcome may be worth it, but the task is not for the “faint-hearted”.

Brexit itself was a landmark event, but it came as technology has continued to surpass itself, bringing major benefits but also looming concerns – from generative artificial intelligence (AI), to cyber criminality and warfare, to a climate crisis – that had previously resided in the realm of imagination and fiction.

Perhaps every generation is at a crossroads in world history. But from early modern explorers to industrial revolution innovators, to 21st Century digital pioneers, the pace of change has shuddered along at the speed of a steam train, then hurtled like a bullet train, and now whizzes through the air with the rapidity of a private passenger space craft.

Increasingly, financial services firms and regulators face the task of functioning in a dynamic, futuristic landscape hitherto relegated to speculative inky pages, and latterly screens.

The challenge, then, is not just in surviving, but in manipulating this brave new world to their advantage and flipping the tried and tested script – without harming consumers and themselves or stamping on ethical barriers. In many senses, the rise of modern computing and the internet has paved the way for a digital minefield.

George Orwell’s 1949 novel 1984 is widely said to have been intended to cleave into the heart of totalitarianism and the risks of a surveillance society. Perhaps more recently in no small part thanks to the eponymous and occasionally raucous noughties Channel 4 show, the idea of ‘Big Brother’ (and that it may very well be watching) has been firmly stamped into the consciousness of generations in today’s workforce.

Much discourse has centred around the advent of big data and the extent to which corporations and organisations can track consumers, and how they use this to inform their decisions.

On the flip side, the rise of ‘sousveillance’, a term said to have been coined in 2003, has also seen companies and watchdogs increasingly scrutinised from the bottom up, as the public gathers and shares on social media.

Increasing monitoring and surveillance may be a touchy subject, but the FCA has made no secret of its intentions to be a data-driven regulator.

Recent fair value analysis has shown that this can bear fruit, with the regulator having issued a three-month ultimatum to insurers on GAP insurance commissions and premiums on the back of this work. Contrast that with the more than a decade the FCA and its predecessor, the Financial Services Authority (FSA), took to join the dots and start to tackle buildings insurance commissions issues, and data collection and analysis already appears to be proving its worth.

Be it post-Brexit rules, big data, use of AI, or the climate challenge, it must be hoped that regulators and other stakeholders digest the risks and look to build something a little more like dystopia’s cousin, utopia, traditionally defined as a perfect place.

Dystopia is a warning, often preying on the fears of one generation in the hope that following ones will do better and prove these reservations unfounded when the time comes.

Of course, the irony of utopia, a 1500s invention that comes from the Greek ou-topos (or ‘no place’), is that in the keenest sense of ‘nowhere’, it cannot exist.

Keep up with the latest news and events

Join our mailing list, it’s free!