Technology Powers FCA’s Successful Crackdown on Unauthorised Financial Services
UK financial regulator leverages data and tech to protect consumers and curb online financial fraud
The Financial Conduct Authority (FCA), the UK’s primary financial regulator, has significantly intensified its fight against unauthorised financial services by harnessing cutting-edge technology and data analytics. Over the course of 2024, the FCA successfully shut down approximately 1,600 websites and 50 finance-related apps available on platforms like the Apple Store and Google Play. This proactive strategy aims to mitigate financial harm at the source before it reaches consumers.
Tech-Led Strategy to Combat Financial Fraud
Faced with the rapid expansion of fintech products and the rising influence of unregulated financial advisors operating over social media, the FCA initiated a technology-driven approach in 2022. This approach marked a shift from reactive problem-solving to predictive analytics capable of identifying suspicious activities early.
CEO of the FCA, Nikhil Rathi, emphasized the transformation by stating that the regulator now "embraces data and technology to crack down on harm and ensure high standards." The FCA has been scanning hundreds of thousands of websites daily, applying advanced analytical tools to detect and disable digital platforms that promote financial services without proper authorisation.
Collaboration with Technology Giants
The FCA’s digital crackdown extends beyond websites to mobile applications, with cooperation from major technology firms playing a crucial role. The partnership with tech giants has enabled the regulator to uncover numerous unauthorised finance apps masquerading in mainstream app stores. Such apps often pose risks by offering unregulated financial advice or products, increasing consumers’ exposure to scams.
Tackling Non-Compliant Products and ‘Finfluencers’
In addition to shutting down unauthorised platforms, the FCA targeted more than 20,000 non-compliant financial products marketed by authorised firms during 2024. This intervention resulted in amendments or withdrawals, enhancing consumer protection.
The regulator also confronted the proliferation of misleading financial advice promoted by unauthorised social media influencers—often referred to as ‘finfluencers.’ Last year alone, the FCA cancelled authorisations for over 1,500 firms, a 20% increase compared to 2023. It issued 2,240 alerts about unauthorised firms, interviewed 20 influencers under caution for illegal promotions, and took action against 38 finfluencer accounts spreading misleading information.
Strategic Technology Investments and Cloud-Based Systems
The FCA’s use of technology is not limited to enforcement activities. Under a major initiative to bolster data management capabilities, the regulator migrated its systems to the cloud, establishing a new regulatory data platform. This platform currently supports over 50,000 finance firms and thousands of users.
Rathi explained the benefits of the data lake infrastructure, noting, “Using our data lake, we aim to more swiftly identify, connect and react to firm and market issues.” He further highlighted improved case management and enhanced risk visibility as key gains from the deployment of advanced analytics.
Commitment to Future Innovation and Consumer Protection
Reflecting on the latest successes, FCA chair Ashley Alder remarked, “Our annual report shows how we’ve laid the strongest possible foundation from which to implement our new strategy. We’ll build on this over the next five years to deepen trust and rebalance risk so we can support growth and improve lives.”
Moreover, the FCA imposed fines totaling over £45 million on two banks for failures related to financial crime controls, including sanctions screening and money laundering risk monitoring—underscoring its broader commitment to secure the financial ecosystem.
Exploring AI and Ongoing Challenges
The regulator has also shown interest in developing artificial intelligence testing environments through its AI Lab initiative, aiming to create safer innovation spaces for financial firms. This signals an ongoing focus on leveraging emerging technologies to safeguard the market.
As financial scams and misleading promotions continue to evolve across websites, apps, and social media platforms, the FCA’s data-driven and technology-enabled enforcement marks a pivotal step in protecting UK consumers and maintaining the integrity of the financial services market.
For related insights into the FCA’s technology-driven initiatives and financial services regulation, visit ComputerWeekly.com and explore dedicated coverage on IT and financial markets.
