Tighter regulatory crackdown on tech firms called for by UK finance chiefs

Posted: 14 May 2018 2:09 pm
News

Calls for Facebook, Apple and Google to be regulated in a similar way to banks are gaining traction.

Calls for technology groups like Facebook, Apple and Google to be regulated in a similar way to banks are gaining traction among senior figures in the City of London.

Financial institutions are increasingly feeling the disruptive pinch of the tech rivals in some of their most profitable sectors.

Companies including Apple, Google, Facebook and Amazon have started their own payments and lending operations. Facebook’s WhatsApp subsidiary has recently set up a payments service in India that enables people to send money to other WhatsApp users.

Fuel was added to the banking sector’s pyre of concerns when it was disclosed that WhatsApp’s “payments privacy policy”, to which users have to agree, allows the company to share data with third-parties including Facebook. The company later said the data would not be used for “commercial purposes”, but it has hardly doused the flames.

Last year, as reported by finder, international money transfer provider MoneyGram introduced a new service that allows customers in the US to transfer funds worldwide using Facebook Messenger.

Douglas Flint, former HSBC global chairman, is just one of the senior City of London figures raising concerns about the freedoms he feels the tech giants are abusing.

He is supported by GSK chairman Sir Philip Hampton and Santander’s chair Shriti Vadera in pointing out that the banking industry has to ensure its platforms are not abused by “bad actors”. However, in the aftermath of revelations that UK research company Cambridge Analytica was able to misuse personal social media data regulatory safeguards were not being applied by the tech giants.

Flint says that under an appropriate regulatory regime a similar oversight to that applied to the banking sector is warranted for key tech platforms. He was talking at the Financial Times City Network, which brings more than 50 of the City’s most senior figures together to debate the burning issues of the day.

Vadera pointed out that although the big tech firms are globally present, they are barely regulated on a national basis.

Sir Philip, who formerly chaired RBS, indicated concern about the dangers associated with the power of mass data analysis. He felt that what he called “sinister political interventions” underlined the need for more formal oversight.

There were more optimistic voices at the network discussion, like Anne Richards of asset manager M&G, who believed that as the world realised the value of aggregate data and how intertwined it is with the financial system and the vulnerability of customers, that financial and data regulation would eventually converge.

Safeguarding consumer data is already due to be tackled by the new EU data rules, governed by the General Data Protection Regulation that comes into force next month.

However, dissenting voices were heard from Simon Walker, formerly head of the Institute of Directors, and Dame Colette Bowe of the Banking Standards Board, who felt there was a danger of heavy-handed imposition of black-letter regulation.

The debate comes as the Financial Conduct Authority (FCA) says firms offering services linked to cryptocurrency must abide by their rules too, as already reported by finder.

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