Who are the UK's digital regulators?

Inline’s previous blog explored the UK Government’s aspirations for the technology and digital sectors and its legislative plans to make the UK a global leader in the space. In this blog, we look at the organisations responsible for regulating the UK’s tech sector, focusing on their powers and for which areas they have responsibility. We highlight some of the regulatory issues that these regulators are dealing with and which we advise tech companies should monitor.

In its Plan for Digital Regulation, the UK Government describes its approach to regulating the digital sector as ‘proportionate and agile’. The three key objectives are:

1. Driving growth by promoting competition and innovation across the digital sector.
2. Ensuring growth and innovation does not harm citizens or businesses by keeping the UK safe and secure online.
3. Protecting fundamental rights and freedoms by shaping a digital economy that promotes a flourishing, democratic society.

The UK’s regulators are semi-autonomous bodies established by statute to carry out specific functions with respect to certain markets. The regulators are guided by the overarching principles which the Government sets out, meaning that they will need to keep the key objectives of the Government’s Plan for Digital Regulation in mind when regulating their respective markets.

In terms of setting the political agenda, the UK Government Department that tech companies should monitor most closely is the Department for Digital, Culture, Media, and Sport (DCMS). DCMS has strategic oversight of the digital economy, and has ministers dedicated to data and digital infrastructure (Julia Lopez MP) as well as tech and the digital economy (Chris Philp). Overall leadership of the department is provided by Nadine Dorries MP, the Secretary of State.

DCMS is assisted by several different departments when it comes to regulating the digital economy, the most significant of which is the Department for Business, Energy, and Industrial Strategy (BEIS). BEIS oversees the UK’s competition regime, and DCMS and BEIS jointly consulted on the new pro-competition regime for digital markets. Other departments will also weigh in if an area of tech policy touches on their remit. For instance, the Treasury has a hand in regulating fintech, and the Department for Transport retains strategic oversight on new aviation technologies, such as drones.

Beneath these departments, there are various regulatory bodies which regulate different areas of the tech sector. We have touched on the main ones below.

Ofcom

Ofcom is the UK’s telecommunications regulator and has been given new responsibilities as part of the Government’s drive to regulate online harms in the UK. A duty to protect children and vulnerable people when they are online has been added to Ofcom’s remit, and the regulator will be given new powers to act against online platforms which do not have appropriate systems and processes to protect users. Significantly for tech companies, Ofcom will have the power to fine platforms which breach the Online Safety Act £18 million, or 10% of qualifying revenue, whichever is higher. These new powers will come into effect with the implementation of the Online Safety Bill, which is currently going through Parliament.

Competition and Markets Authority (CMA)

The CMA is the UK’s competition watchdog, and has been given a new division, the Digital Markets Unit (DMU) to oversee regulations affecting the most powerful digital firms. The DMU will be responsible for upholding the Government’s proposed ‘pro-competition’ regime. This will seek to promote competition online by regulating the largest platforms in certain key markets, such as online search. The DMU’s powers will require new legislation, so for the moment it is concentrating on preparing for the new regime. A key part of this work involves engaging with stakeholders and building relationships across the tech sector, so now is a good time for companies to reach out to the DMU.

Financial Conduct Authority (FCA)

The FCA regulates the UK’s financial services industry and is therefore responsible for the regulation of certain fintech activities, such as Open Banking. It also helps enable new fintech products via a regulatory sandbox, which allows start-ups to test new propositions without fear of breaching existing rules. Emerging fintech products are usually brought under the remit of the FCA. For instance, in early 2021, the UK Government announced that buy-now-pay-later products would be regulated by the FCA. If your business is an innovator in the financial services space, there is a strong chance that you will need to engage with the FCA one day.

Information Commissioner’s Office (ICO) 

The ICO is the UK’s data protection regulator and is responsible for enforcing the UK’s data protection regime. As the UK Government refines and moderates the UK’s interpretation of the General Data Protection Regulation in the wake of Brexit, it will give the ICO new responsibilities to have regard for economic growth, innovation, and competition when regulating. The ICO’s remit therefore touches on all aspects of the digital economy, and tech companies should monitor its implementation of the UK’s new data regime.

Advertising Standards Authority (ASA)

The Advertising Standards Authority oversees the UK’s advertising regime, both in traditional media such as television and newer forms such as online advertising. The ASA describes itself as being at the forefront of regulating new forms of advertising. For example, the ASA has recently been liaising with brands and influencers regarding paid-for ads on social media platforms, ensuring that adverts which are paid for by brands are labelled as such and not incorrectly marketed as the influencer’s opinion. The ASA is also investigating how to regulate deceptive advertising content online and will be at the forefront of implementing the government’s forthcoming Online Advertising Programme.

The Digital Regulation Cooperation Forum (DRCF)

The regulators outlined above all have specific areas of competence. To ensure that the regulation of the digital sector is coherent, the ICO, Ofcom, and CMA formed the DRCF in July 2020, with the FCA joining in April 2021. In March 2022, DCMS Secretary Nadine Dorries outlined the Government’s priorities for the digital regulatory landscape in a letter to the DRCF. As the DRCF finalises its work plan for 2022/23 Dorries has asked it to focus on:

• Joining up the regulatory landscape by sharing expertise, developing common capabilities, maximizing efficiencies in the way regulators operate, and minimizing unnecessary burdens on businesses.
• Adopting a flexible and innovative approach to regulation engagement and transparency.
• Coordinating on horizon scanning.

The Government has also flagged the following sectors for the DRCF to prioritise, including: AI governance; online advertising; the National Data Strategy; online safety; competition policy; and data.

Tech companies in the UK should take note of these regulators and develop strategies to engage with them. Inline Policy can help companies to understand and influence policy and regulation and has a strong track record of helping companies meet with regulators. If you have any questions about anything in this blog, please contact us at enquiries@inlinepolicy.com