Britain’s banks and insurers must take the lead in spelling out how they will use data collected from customers or they could face new rules, Financial Conduct Authority Chair Charles Randell said on Wednesday.
The use of ‘Big Data’ requires good communication so that consumers understand and accept a firm’s approach to using their data and don’t end up being “disenfranchised”, Randell said, Reuters reported.
In the financial sector, insurers are looking to ramp up their use of Big Data, including social media use, to price motor or home insurance more accurately, rewarding customers considered lower risk, such as due to good driving habits.
Some insurers offer lower health insurance premiums based on regular gym attendance.
“By good communication, I don’t mean pages and pages of obscure disclosures, disclaimers and consents. I mean short and readable statements which make it clear what firms will and won’t do with their customers’ data,” Randell told a Reuters Newsmaker event.
“These need to be developed with consumers, not imposed on them,” Randell said in his first major speech since becoming chair of the FCA in April.
“A number of firms do this already but many do not. Should all businesses have a data charter? Should these be developed through voluntary codes of practice? Will the industry take the lead or should they be a regulatory requirement?”
In September 2016, the FCA dropped plans for a formal review of whether Big Data might make it harder or more expensive for some customers to buy a car or home insurance, but said it would look at the risk of some customers being excluded.
Randell said the power of Big Data corporations and their central place in providing services that are now essential in everyday lives raise significant questions about the adequacy of global frameworks for competition and regulation.
Britain’s information regulator said on Wednesday it intends to fine Facebook £500,000 ($663,550), the maximum possible, for breaches of data protection law as the watchdog investigates how millions of users’ data was improperly accessed by consultancy Cambridge Analytica.
