The benefits promised by the financial industry’s use of big data currently outweigh the potential risks to the industry’s consumers, according to a report from the the Joint Committee of the European Supervisory Authorities (ESAs).
Some of the risks outlined in the report include errors in the data itself that lead firms to poor decisions, security concerns, and the use of data to increasingly segment clients and implement discriminatory pricing. However, “there is limited evidence of such risks materializing,” the report says.
For now, there’s no need for legislative action to address the risks posed by the use of big data in the financial sector, the ESAs conclude. “Legislative intervention at this point would be premature, given that some key pieces of legislation are yet to be implemented or have just entered into application,” the report says.
However, it is “very important for supervisors across various policy areas to co-ordinate better to ensure that these requirements are effectively complied with,” the report stresses
The committee, which includes banking, securities, insurance and pension regulators, says that it will continue to monitor developments in this area.
It calls on the financial industry to develop, and implement, good practices on the use of big data, designed to ensure “fair, transparent and non-discriminatory” treatment of consumers.
In particular, firms should develop guidelines for data processes, consumer protection, and the disclosure on the use of big data, the committee says in a news release.