It's been a long wait but the UK's financial services regulator, the Financial Conduct Authority (FCA), has published proposed guidance for UK-regulated financial services firms when using cloud-based ICT solutions. Although the proposed guidance raises as many questions as it answers, the main take-away for regulated financial services firms ought to be that some form of guidance as a framework for cloud adoption is better than nothing.\nThis is the first time the FCA has issued guidance specifically directed at cloud services. In the United States, the federal financial regulatory agencies published guidance over three years ago.\nThe FCA's aim in issuing its draft Guidance consultation 15\/6 is to avoid imposing inappropriate barriers on regulated firms' ability to adopt cloud-based solutions, while ensuring that risks are appropriately identified and managed. The FCA has recognised that, from a regulatory perspective, there is no fundamental reason why cloud services (including public cloud services) cannot be implemented in a manner that complies with its rules. The FCA also acknowledges that, although different requirements may apply to different types of firms and different types of cloud-based services, the outcome that all regulated firms are expected to demonstrate is the same.\nGuidance 15\/6 builds on the existing FCA approach to outsourcing. The FCA identifies three risks that it feels are specific to cloud-based solutions over-and-above "normal" outsourced technology services delivery methods:\n1.Cloud customers may have less scope to tailor the service provided;2. Coud providers may move customer data around with less visibility and control for the data owner; and3. Cloud providers may also contract out part of the service provided to other cloud providers, again without visibility for the customer.\nThe proposed guidance lists a number of areas that regulated firms should consider when using cloud-based services, including how they should discharge their oversight obligations. These include risk management, compliance with international standards, data privacy and security, and exit planning. Each area is accompanied by a list of bullet points for consideration and, helpfully, the guidance offers a number of clear statements detailing what the FCA expects in terms of access to data (access for regulated firms, auditors and the FCA to a wide category of data including firm data, personal data, transaction data, HR data and audit logs), access to premises and exit planning (including documented and regularly rehearsed exit plans and obligations on the outsourced service provider to co-operate fully to ensure a successful transition).\nA Glass Half-full\nIt has taken a long time for the FCA to get off the fence on cloud computing, and it's not hard to feel that the FCA's guidance is long overdue.\nAny regulated financial institution looking to the draft guidance as a complete road-map for a planned adoption of cloud services will be disappointed. The paper does not lay out what cloud services can be safely adopted, what a firm should look for in its contract with a cloud services provider, or what mandatory audit requirements exist over cloud services. But that's not really the FCA's job, and to expect otherwise would be unrealistic.\nBut criticism of the lateness of the guidance, or the fact that it is high-level and risk-based, misses the point. What's important is that the FCA has finally produced something to fill the vacuum left by its previous silence on cloud computing issues. The proposed guidance gives regulated firms assurances that, as long as they comply with the FCA's rules and guidelines, they now have a framework that can be used as a structure to guide compliance with the FCA's rules when adopting cloud-based services.\nThe challenge for regulated firms will be to use the draft guidance - due to be published in final form in 2016 - to create an appropriate framework for assessing cloud-based risks, determining which services can be sourced via the cloud while still ensuring compliance, and making key decisions on what risk mitigation factors are necessary to counteract any gaps between the FCA's expectations and what cloud providers might offer as part of their solutions.\nCloud providers themselves will, one hopes, focus on the FCA's guidance as an expression of their regulated financial services customers' compliance requirements and begin to create offerings tailored to ensure compliance. Already there are signs of positive steps in some areas, such as the creation of graduated customer audit rights, offered as a series of scaled payable options to suit customers' needs. The financial services industry as a whole would welcome such commercial innovation from a segment of the technology industry that has shown such extensive technical innovation in cloud services for over 15 years now.