FCA gives the green light to cloud adoption

FCA gives the green light to cloud adoption

Financial service providers would not be in breach of strict data protection and customer service rules by utilising cloud technology, it has been announced.

The Financial Conduct Authority (FCA) has laid out new cloud guidelines, which stated that there is no reason why financial service providers should not take advantage of cloud computing, and that it does not conflict with existing guidelines.

These new regulations set out by the FCA could form the basis for how UK financiers use the powerful new technology to run their companies.

It said that rather than conflicting with any existing mandates, using the cloud could in fact boost competition in the finance industry.

The FCA claimed that 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".

Speaking about the new guidelines unveiled by the FCA, John Salmon of law firm Pinsent Masons 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."

However, although the FCA has given the green light to the adoption of cloud technology, it did warn that by sourcing their IT services through a third party, financial companies may be presented with fewer opportunities to personalise their systems, which could lead to increased risks for clients in terms of data protection.

To combat this problem, the FCA said that it is important for companies to perform thorough checks to ensure that they know exactly where their data is stored, as it is possible that remote services facilities are subcontracted in a way that may not be apparent to firms.

Outsourcing arrangements would also need to be within the jurisdiction of British courts and both the relevant employees and outside auditors would need to have the ability to access the relevant data they need to conduct their duties effectively.

A statement published by the FCA said: "The focus should therefore be on which business premises are relevant for the exercise of effective oversight; this does not necessarily require access to all business premises. For example, service providers may, for legitimate security reasons, limit access to some sites – such as data centres."

The report clearly highlights the advantages of cloud technology for financial firms. It also underlines the importance of choosing a trusted and reliable British firm such as ihotdesk when outsourcing IT tasks, in order to ensure that tasks are completed in a professional and transparent way.

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