The National Audit Office (NAO) has launched an investigation of Financial Conduct Authority’s effectiveness and ability to manage a growing list of responsibilities, including the overseeing of online fraud, crypto and risks surrounding artificial intelligence.

The review is understood to include examining the FCA’s governance, strategy, and culture and well as its approach to regulating diverse types of firms and markets. Additional areas for the investigation include the use of data and intelligence to identify and address risks and its effectiveness in achieving its statutory objectives and delivering public value.

The FCA was recently tasked with making sure cryptocurrency firms comply with money laundering rules, and by October it will be tasked with monitoring crypto-related adverts. Those responsibilities could expand as the government makes final decisions on how to regulate the wider sector.

The NAO explained that the decision to assess the FCA came along as a result of “significant changes” in the way it is expected to regulate the financial services sector, the organisation explained.

Dr Henry Balani, Global Head of Regulatory Affairs at Encompass Corporation, said: “Organisations like the FCA play a critical role in the development of the financial services industry, providing institutions with key guidance, as well as supporting them to operate at the highest standards.

“At a time when financial crime, particularly, remains a pertinent global issue, keeping up with the pace of change should be a top priority.”

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“This review represents a step forward and will help the FCA to fine tune its processes, improving operations and ensuring it is fully prepared to assist businesses in navigating an increasingly complex regulatory landscape,” added Balani.

FCA chief, Nikhil Rathi, has also been trying to stay ahead of risks posed by AI. He used a speech last week to warn banks, investors and insurers that while AI could improve productivity and the detection of fraud and money laundering, senior managers would ultimately be held responsible for any decisions taken by AI software.