The UK’s Financial Conduct Authority (FCA) is seeking comments on the potential competition benefits and harms from Big Techs entering retail financial services sectors.
It stated that Big Tech firms’ presence in the UK financial services markets has been increasing steadily, with the potential to expand further and change markets quickly.
Alongside the request for comments, the FCA has published analysis that focuses on the potential competition impacts of Big Tech’s entry in four vital retail sectors, payments, deposit taking, consumer credit and insurance.
By incorporating financial services with their existing service, Big Tech firms can increase the benefits to customers. These could be innovative new offers with competitive pricing driven by increased efficiency, delivering healthy competition with incumbent financial services providers.
However, these Big Tech firms could post competition risks if they rapidly gain market share, and they are able to exploit market power.
While no regulatory changes are being proposed at the moment, the FCA hopes its paper can foster discussions to inform its regulatory approach to Big Tech firms as part of its new UK pro-competitive regime for digital markets.
Sheldon Mills, executive director of consumers and competition, said, “In recent years, Big Tech’s entry into financial services, in the UK and elsewhere, has demonstrated their potential to disrupt established markets, drive innovation and reduce costs for consumers. Across the world, we’ve seen the capability of Big Tech to offer transformative new products in areas such as payments, deposits and consumer credit.
“We want to make sure that these benefits are fully realised while, at the same time, ensuring good consumer and market outcomes. This is vital when we consider the role of Big Tech firms in the provision of key technological infrastructure like cloud services.
“The discussion we are starting today will inform the FCA’s pro-competitive approach to digital markets, and I encourage consumers, firms and fellow regulators to join the conversation.”
Earlier in the month, the FCA wrote to insurance industry CEOs to make customers are protected from unfair penalties, add-ons and unnecessary products during the cost-of-living crisis.
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