28 November 2022 Issue 6 Peter Flynn

Window of opportunity

Peter Flynn looks at how the UK is embracing digital technology to enhance fund governance

The trustee and depositary landscape has evolved rapidly in recent years. We have seen a greater focus on environmental, social and governance (ESG) factors; sustainable finance; diversity and inclusion; and the introduction of new regulatory standards, all of which have driven a number of changes to the way we work.

Perhaps one of the biggest trends in the current landscape is the continued evolution of digital technology and its accelerating use in further enhancing the high standards of work and regulation.

There is now a window of opportunity for the UK to embrace technological innovation, which has the ability to shape nearly every aspect of fund finance, from ensuring funds are securely managed and following legislation, to improving security or proving that ESG funds are meeting goals.

Digital technology and regulation

As the industry evolves, a more innovative and adaptive approach to regulation entails a greater focus on the digital space. Earlier in 2022, the Financial Conduct Authority (the FCA) addressed the challenges of purpose and strategy in its Business Plan 2022/23 and Threeyear Strategy 2022 to 2025,[1] with an enhanced focus on the priorities of consumer protection and duty of care. Further, the FCA has taken a more probing approach to fund authorisations, as well as the issuance of detailed requests for information. This indicates a growing regulatory desire for more ‘deep dives’ to understand the composition of funds at a more granular level and of the firms that issue them.

Many firms are exploring ways in which technological solutions can support more efficient regulatory engagement. The FCA itself has sought to embrace new means of fulfilling its evolving responsibilities, for example, through the relatively recent launch of its RegData reporting platform.[2]

Please login to access this content

If you are not a member, find out more about joining STEP or subscribing to STEP articles.