The regulator’s move follows the launch of Amazon’s home insurance store last week
The FCA is examining how it could regulate big tech firms such as Amazon and Google as fears grow that their entry into financial services markets could disrupt competition.
The regulator said that these big tech firms’ presence in the UK’s financial services markets has been steadily increasing, with the “potential to expand further and change markets quickly”.
In its announcement – posted today (25 October 2022) – the FCA explained that no regulatory changes were being proposed at this point and that it was aiming to simply “stimulate discussion” through the publication of analysis on the potential competition impacts of big tech’s entry into financial services.
This news follows the launch of the Amazon Insurance Store to select customers last week (19 October 2022), which allows customers to purchase home and contents insurance without leaving the e-commerce giant’s online store.
Entries to the market such as Amazon’s could bring benefits to consumers via increased efficiency according to the FCA, but it added that big tech firms could also pose competition risks if they rapidly gained market share and were able to exploit market power.
Sheldon Mills, the FCA’s director of consumers and competition, explained: “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.
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“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.”
Mills added that the regulator wanted to ensure the benefits of big tech firm’s position in the market could be realised while also ensuring “good consumer and market outcomes”.
He said: “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.”
The FCA added that was inviting responses to its discussion paper and would accept these until 15 January 2023.