The US data analytics firm Palantir has quietly gained access to the UK's financial watchdog as Whitehall simultaneously signals it wants to reduce dependence on large foreign technology vendors. The Financial Conduct Authority has awarded the American company a three-month trial contract worth more than £30,000 a week to analyse its internal data repository covering fraud, money laundering, insider trading, and consumer complaints.
Palantir will access data including case files, reports from banks and crypto firms, and communications material such as emails, phone records, and social media tied to investigations. The stated purpose is to help sift patterns of financial crime faster than human analysts across roughly 42,000 businesses under FCA oversight.
The arrangement is striking for one simple reason: timing. The FCA deal arrives just days after the government signalled it wants to rethink how it buys technology, amid concerns about overreliance on a small number of large vendors and the need for more sovereign capability. Yet here sits another sensitive system handed to a US company whose entire business is built on ingesting and analysing other people's data.
Palantir has spent recent years embedding itself across the British state from the NHS to policing and defence, accumulating more than £500 million in public sector contracts. Critics describe this as a classic land and expand strategy: start with a narrowly scoped deployment, prove value, then become very hard to remove.
The FCA has stressed that Palantir is acting strictly as a data processor, all data remains hosted in the UK, and the company cannot use information to train its own models. An FCA spokesperson told The Register: "Effective use of technology is vital in the fight against financial crime and helps us identify risks to the consumers we serve and markets we oversee. We ran a competitive procurement process and have strict controls in place to ensure data is protected."
Those assurances mirror language used in earlier public sector deals, particularly in the NHS, where officials have repeatedly argued that contractual controls and technical safeguards govern use. Whether that is enough to calm critics is another matter.
Professor Michael Levi, a specialist in financial crime, said the use of AI could significantly improve detection, but he raised questions about governance and accountability. He asked: What are the protocols agreed between the FCA and Palantir about the onward use of things that they have learned in that process?
Christopher Houssemayne du Boulay, a partner at Hickman & Rose, warned that the FCA could be dealing with hundreds of whole email accounts and full financial records, and cautioned that if data is ingested and used to train an AI system, there are very significant privacy concerns.
Palantir's track record spanning US defence, intelligence, and immigration enforcement has made it a lightning rod for concerns about surveillance and civil liberties, especially when deployed in civilian contexts. Internal concerns about the arrangement have been raised within the FCA itself, according to sources familiar with the matter.
The broader picture matters. The UK government has promised a different approach to tech procurement following controversial Palantir contracts, with science minister Patrick Vallance telling MPs the government's deals with Palantir would be done differently in future, emphasizing investment in UK technology and companies instead. Yet government departments keep turning to Palantir.
That contradiction sits at the heart of the FCA decision. Public officials confront a genuine operational challenge: vast amounts of underused data and pressure to do more with less. The FCA is sitting on vast amounts of data, much of it underused, and AI vendors are lining up to promise they can turn it into actionable intelligence.
The question is whether the operational gains justify the structural risks. Palantir's latest foothold in financial regulation takes it into the heart of the City, giving it visibility over one of the UK's most economically important sectors. Once a vendor becomes embedded in critical systems, exit costs mount and alternatives become harder to justify. That is the real logic of the land and expand model.
For now, this remains a three-month trial. But the pattern is clear. Whitehall's stated commitment to reducing vendor lock-in and building sovereign capability has not translated into procurement decisions that reflect that commitment. The FCA deal is only the latest evidence of that gap between policy intention and bureaucratic reality.