UK: FCA paves way for cloud computing in financial services

The Financial Conduct Authority (FCA) has paved the way for banks, insurers and other financial services companies to take advantage of cloud computing services, so long as “appropriate safeguards” are in place, said one commentator.

In proposed new guidance on cloud and other IT outsourcing (PDF), the regulator said there is “no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules.”

Financial services and technology law expert John Salmon of Pinsent Masons, the law firm behind Out-Law.com, said: “It is really positive for the FCA to recognise that the financial services sector can move ahead with plans to use cloud services, as long as appropriate safeguards are put in place.”

“This is consistent with the regulator’s efforts to promote innovation in the sector and should help more firms benefit from cloud solutions,” he added.

The FCA said cloud outsourcing can help improve competition in the financial services sector. This is because it can “facilitate entry and/or expansion, and increase the ability of financial services providers, overall, to renew their IT systems in a more efficient manner”.

The “improved choice and innovation in outsourcing” should deliver “commensurate benefits for firms and consumers”, it said.

The FCA said there are risks that companies need to manage when outsourcing to cloud providers. The commoditised nature of many cloud services means cloud customers “may have less scope to tailor the service provided”, it said.

Full content: ihotdesk

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