Context
The FCA has published a Feedback Statement FS23/4 in relation to the competition impact of Big Tech entry and expansion in the retail financial services marketplace. The Big Tech firms referenced within the Statement are Google, Amazon, Meta/Facebook and Apple. The Statement has been published in response to Discussion Paper DP22/5, which assessed potential benefits and harms in four retail financial services sectors (payments, deposits, consumer credit and insurance), and which aimed to aimed to stimulate conversation on areas where Big Tech entry is likely to create the biggest competition benefits for consumers and where there is the greatest risk of significant harm if competition does not develop effectively.
Key points to note
- The Statement sets out various elements of feedback, including potential competition benefits and harms and stakeholder regulatory concerns.
- The Statement outlines a number of key themes which emerged from responses to DP22/5:
- differing Big Tech business models and strategies
- refining the FCA’s analytical framework
- data access and data sharing
- Big Tech activity at, or beyond, the FCA’s regulatory perimeter, and overlap with other regulators and regimes
- In relation to the insurance sector, respondents suggested that access to a range of user data could enable Big Tech firms to make more precise risk assessments using highly sophisticated predictive technologies.
- Some respondents raised competition concerns that may arise where other market participants are unable to access Big Tech datasets. This feedback was more prominent in the consumer credit and insurance sectors, particularly when data is used in the pricing of risk or affordability.
- Some respondents noted that noted that Big Tech firms are able to access Open Banking data, but no reciprocal arrangement exists for financial services firms to access Big Tech data. Respondents argued that this may cause asymmetry to data access and a potential one-way data flow that allows Big Tech firms to capture a larger market share, relative to other financial services firms.
- The FCA referenced its work on the Credit Information Market Study.
- Next steps for the FCA include a commitment to shaping digital markets, including work on open banking and open finance, the development of regulatory approaches for Critical Third Parties (CTPs) and artificial intelligence (AI).
- The FCA will launch, by the end of 2023, a Call for Input on Big Tech firms as ‘gatekeepers’, will review its supervisory approach for Big Tech firms, and will continue to work with the Government and the Digital Markets Unit (DMU).
Next actions
None – for information and awareness.