The FCA is seeking views on the potential competition benefits and harms from Big Tech firms’ entry into a range of retail financial services sectors.
Big Tech firms’ presence in UK financial services markets has been steadily increasing, with the potential to expand further and change markets quickly.
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."
To begin the discussion, the FCA has published analysis focusing on the potential competition impacts of Big Tech’s entry in four vital retail sectors: payments, deposit taking, consumer credit and insurance.
By combining financial services with their existing business, Big Tech firms can bring benefits to consumers. These might be innovative new offers with highly competitive pricing driven by increased efficiency, delivering healthy competition with incumbent financial services providers.
But in the longer term, Big Tech firms could pose competition risks if they rapidly gain market share, and they are able to exploit market power.
No regulatory changes are being proposed at this stage, and the FCA’s paper aims to stimulate discussion to inform its regulatory approach to Big Tech firms as part of the new UK pro-competitive regime for digital markets.
The FCA has a long-established reputation for supporting innovation and competition across financial markets and it is committed to delivering fair value for consumers in digital markets, as outlined in its latest Business Plan.
Notes to editors
- The Discussion Paper is available to read here.
- The FCA is inviting responses by 15 January 2023 and will be hosting an expert panel event on 28 November, followed by sector specific workshops on 6 and 7 December. Register here.
- The FCA’s discussion paper accompanies wider joint work on online safety, consumer protection and financial stability in digital markets, including:
- with the Prudential Regulation Authority (PRA) and Bank of England, on operational resilience and the role of critical third parties
- with Ofcom through the Digital Regulation Cooperation Forum (DRCF), on online safety and financial fraud to protect consumers from scams