FCA offers cloud support

FCA offers cloud support

The UK's Financial Conduct Authority (FCA) says there is "no fundamental reason" why FS firms cannot use public cloud services.

In new guidelines, the FCA says: "We see no fundamental reason why cloud services (including public cloud services) cannot be implemented, with appropriate consideration, in a manner that complies with our rules."

Clarification comes after industry players admitted that they were unsure how the watchdog applies its rules when it comes to outsourcing to the cloud.

With the FCA making a concerted effort to push innovation as a way of boosting competition, it is stressing the benefits of using cloud services, saying that their flexibility can bring "benefits to firms, their consumers, and the wider market".

However, there are risks, most notably in relation to data security. The guidance says that firms should "agree a data residency policy with the provider upon commencing a relationship with them, which sets out the jurisdictions in which the firm’s data can be stored, processed and managed".

In addition: "Considerations should include the wider political and security stability of the jurisdiction; the law in force in the jurisdiction in question (including data protection); and the international obligations of the jurisdiction."

More generally, before using the cloud, firms should "have a clear and documented business case or rationale in support of the decision to use one or more service providers for the delivery of critical or important operational functions or material outsourcing".

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Comments: (1)

Alex Kwiatkowski
Alex Kwiatkowski - SAS - London 12 July, 2016, 16:49Be the first to give this comment the thumbs up 0 likes

The FCA's show of support for cloud in financial services is a welcome step towards driving greater adoption.

Across challenger banks, and tier one players alike, cloud as a key enabler of digitalisation is a fundamental part of the future. The more regulators approve it, the more resistance will be reduced.

The issue of security will be ever present within the cloud debate but as long as every effort is made to ensure these solutions are as secure as possible the benefits, including faster access to innovation, transformation at scale and speed to market, stack up.