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Background
The us government announced with its Productivity Plan 2015 that departments may be expected to work with regulators to publish innovation plans by spring 2016. This announcement reflects the key government try to make sure the UK is supporting the development of new business models and disruptive technologies, wearing down barriers to entry and boosting productivity. To achieve this the UK’s regulation and enforcement frameworks must be agile adequate to respond flexibly to continuing developments in new technologies and business that is disruptive.
The purpose of this consultation would be to put down ongoing and work that is proposed foster a supportive regulatory framework for financial services which allows innovation to flourish.
The innovation plan covers the work of this financial services regulators: Financial Conduct Authority (FCA ), Payment Systems Regulator (PSR ), Prudential Regulation Authority (PRA ) and the wider Bank of England.
The innovation plan covers three issues that are key
- How new technology is shaping financial services
- How financial services regulators are adapting to new technologies and disruptive business models to encourage growth
- How services that are financial are better utilising new technologies to build efficiency savings and minimize burdens on business
This consultation invites comment on the job of financial services regulators to aid innovative technology and disruptive business models. We might also like to understand where there might be gaps in regulatory approach when it comes to supporting innovation.
Draft innovation plan for financial services
2.1 Innovation and regulation
The vision that is government’s for UK financial services to function as the most competitive and innovative on the planet, delivering greater choice and value for consumers.
The federal government has already taken significant action to reach this vision. This consists of:
Creating the right regulatory environment is particularly important to make certain that innovative firms can compete and grow. To the end, HM Treasury has firmly embedded competition and innovation objectives when you look at the regulatory landscape for financial services through the primary regulators’ objectives and remits.
2.2 How technology that is new shaping financial services
An integral focus of innovation in financial services in modern times may be the development of fintech – technology solutions which deliver financial services, often in an even more efficient and way that is customer-focused. For example, technology has enabled:
- consumers to create payments via their smartphones
- the matching of consumers and businesses with money to save and invest with people who need to borrow
- personal insurance pricing based on the characteristics and behaviours of individual consumers
- the development of new currencies that are digital
The financial services sector is characterised by both new disruptive players and fintechs working together with incumbents to supply more innovative services and products through existing networks and infrastructure.
The sector that is fintech diverse: from small dynamic start-ups to more established players. Fintechs operate in lots of areas of financial services – for instance, payments, peer-to-peer lending, big data analytics and robo-advice – and the prospect of technology to transform financial services is substantial. 25% of most fintechs globally come in the retail payments industry 1 .
The united kingdom may be the world-leader in fintech. An independent report from Ernst and Young (EY) published in February ranked the united kingdom since the leading fintech centre in the world – ahead of other leading hubs like Silicon Valley, New York and Hong Kong.
The UK’s fintech sector has been rap >2 that is growing .
2.3 How financial services regulators are adapting to new technologies and business that is disruptive to encourage growth
This section outlines how each financial services regulator intends to support and promote innovation, facilitating the development of new technologies and business that is disruptive in financial services.
The government’s priority is always to make certain that regulation is proportionate and promotes innovation, instead of constrains or inhibits it. Indeed you will find likely to be some areas of existing regulation, developed long before digital and advances that are technological which may now be acting as a barrier to innovation.
2.4 Financial Conduct Authority (FCA )
Project Innovate
It helps innovative firms get access to fast and feedback that is frank the regulatory implications of these concepts, plans and choices. It seeks to tackle the structural problems that impede the progress of innovators going into the market.
Part of Project Innovate is the Innovation Hub which helps new and businesses that are establishedboth regulated and non-regulated) introduce innovative financial loans and services into the market. The Innovation Hub also identifies areas where the framework that is regulatory to conform to enable further innovation in the interests of consumers.
Up to now, Project Innovate has helped over 250 firms, 18 of which have been authorised to undertake regulated activities. It offers an experience that is end-to-end new entrants. Firms that receive initial support through the Innovation Hub have their applications for authorisation handled via a specialised Project Innovate authorisation process.
- working with government on its intends to introduce anti-money laundering regulation for digital currency exchanges, to give you a supportive environment for legitimate digital currency users and businesses, and create a hostile environment for illicit users
- making a statement taking a look at the extent of the problem of disproportionate de-risking, which denies businesses use of banking facilities, and just how the FCA might influence firms to take a far more proportionate approach
- using informal steers on proposed innovations to allow more communication that is direct firms
The UK attracts fintech innovators from around the whole world – many decide to base themselves within the UK, not only to engage in a vibrant local ecosystem, but also because they begin to see the UK as a springboard to launch their businesses or products internationally and bolster their competitiveness.
As an element of this work the FCA :
- Helps put UK-based innovators in touch with the best regulators if they turn to start business that is doing other regulatory jurisdictions
- Stand ready to help innovators that are non-UK in going into the UK market
- Seeks co-operation agreements with key regulators. For instance, the FCA recently signed a co-operation that is world-first with the Australian regulator, ASIC, to facilitate the referral of innovative firms between their respective innovation hubs
- Promotes pro-innovation regulatory methods to international standard-setters
Other initiatives to support competition and innovation
The guidance is designed to dispel misconceptions about regulators’ opposition to your encourage and cloud innovation in this region.
It aims to encourage greater utilization of technology and behavioural insights to provide communications which help people make effective decisions about products and services. The FCA is dedicated to using the services of industry where a concept has strong potential to improve consumer outcomes; the FCA may consider waiving or disclosure that is modifying where appropriate to facilitate this testing.
It’s also taking a look at amending its Handbook to get rid of a quantity of disclosure requirements which have not been as effective as initially envisaged with regards to providing information that is appropriate consumers.
2.5 Payment Systems Regulator (PSR )
Usage of payment systems is an important driver of competition and innovation into the provision of payment services. Limited access has long been considered a barrier to entry for brand new banks, e-money issuers along with other payments institutions, aided by the concern that the pace of innovation in this area is simply too slow.
A main objective is to function proactively with small payments institutions and fintech firms to spot where in fact the barriers to innovation exist, which feeds in to the PSR ’s policy development and implementation.
Competitive innovation
This includes publishing reports that are annual assess each scheme’s compliance, which include places where the PSR expects to see improvements. The PSR will consider further regulatory action if improvements are not made.
To make sure that the market is operating in a manner that supports competitive innovation, the PSR is conducting two market reviews:
The findings that are interim both reviews were published in February and March prior to the final reports later in 2010. According to its findings, the PSR may implement remedies or undertake further policy strive to support innovation that is competitive.
Collaborative innovation
Following engagement utilizing the wider payments community, the Forum developed its initial pair of priority areas. This consists of:
- Greater assurance and control for end users
- Simplifying usage of marketplace for payment services providers
- An evaluation of how industry can work to detect and lower financial write my paper for me crime
- An assessment regarding the costs and great things about account number portability