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The us government announced with its Productivity Plan 2015 that departments will soon be necessary to make use of regulators to write innovation plans by spring 2016. This announcement reflects the important thing government aim to make sure the UK is giving support to the development of new business models and disruptive technologies, breaking down barriers to entry and productivity that is boosting. To do this the UK’s regulation and enforcement frameworks should be agile adequate to respond flexibly to continuing developments in new technologies and business that is disruptive.
The goal of this consultation is always to put down ongoing and work that is proposed foster help me with my homework a supportive regulatory framework for financial services which allows innovation to flourish.
The innovation plan covers the task associated with the financial services regulators: Financial Conduct Authority (FCA ), Payment Systems Regulator (PSR ), Prudential Regulation Authority (PRA ) while the wider Bank of England.
The innovation plan covers three issues that are key
- How technology that is new shaping financial services
- How financial services regulators are adapting to new technologies and business that is disruptive to encourage growth
- How financial services regulators are better utilising new technologies to come up with efficiency savings and lower burdens on business
This consultation invites comment on the work of financial services regulators to support innovative technology and disruptive business models. We would also like to understand where there could be gaps in regulatory approach with regards to innovation that is supporting.
Draft innovation arrange for financial services
2.1 Innovation and regulation
The government’s vision is for UK financial services to end up being the most acceptable and innovative in the field, delivering greater choice and value for consumers.
The us government has already taken significant action to reach this vision. This consists of:
Creating the best regulatory environment is particularly vital that you make sure innovative firms can compete and grow. To this end, HM Treasury has firmly embedded competition and innovation objectives into the regulatory landscape for financial services through the primary regulators’ objectives and remits.
2.2 How technology that is new shaping financial services
A key focus of innovation in financial services in the last few years is the growth of fintech – technology solutions which deliver financial services, often in a more efficient and way that is customer-focused. As an example, technology has enabled:
- consumers which will make payments via their smartphones
- the matching of consumers and businesses with money to save and invest with those who want 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 dealing with incumbents to supply more innovative products and services through existing networks and infrastructure.
The fintech sector is diverse: from small dynamic start-ups to more established players. Fintechs operate in many aspects of financial services – for example, payments, peer-to-peer lending, big data analytics and robo-advice – and also the potential for technology to transform financial services is substantial. 25% of all of the fintechs globally have been in the payments that are retail 1 )
The united kingdom is the world-leader in fintech. An independent report from Ernst and Young (EY) published in February ranked the united kingdom as 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 disruptive business models to encourage growth
This section outlines how each financial services regulator plans to support and promote innovation, facilitating the introduction of new technologies and business that is disruptive in financial services.
The government’s priority is to make certain that regulation is proportionate and promotes innovation, instead of constrains or inhibits it. Indeed you will find probably be some aspects of existing regulation, developed well before digital and technological advances, which could now be acting as a barrier to innovation.
2.4 Financial Conduct Authority (FCA )
It helps innovative firms gain access to fast and frank feedback on the regulatory implications of the concepts, plans and choices. In addition seeks to tackle the structural conditions that impede the progress of innovators going into the market.
Part of Project Innovate is the Innovation Hub which helps new and established businesses (both regulated and non-regulated) introduce innovative financial products and services to the market. The Innovation Hub also identifies places where the regulatory framework needs to adapt to enable further innovation into the interests of consumers.
To date, Project Innovate has helped over 250 firms, 18 of which were authorised to undertake regulated activities. It provides an end-to-end experience for new entrants. Firms that receive initial support through the Innovation Hub have their applications for authorisation handled via a specialised Project authorisation process that is innovate.
- using the services of government on its intends to introduce anti-money laundering regulation for digital currency exchanges, to produce a environment that is supportive legitimate digital currency users and businesses, and produce a hostile environment for illicit users
- making a statement looking 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 more approach that is proportionate
- using informal steers on proposed innovations to enable more direct communication with firms
The united kingdom attracts fintech innovators from about the whole world – many decide to base themselves into the UK, not only to engage in a vibrant local ecosystem, but also since they begin to see the UK as a springboard to launch their businesses or products internationally and bolster their competitiveness.
As part of this work the FCA :
- Helps put UK-based innovators in contact with just the right regulators if they look to start doing business in other regulatory jurisdictions
- Stand ready to help non-UK innovators interested in entering the UK market
- Seeks co-operation agreements with key regulators. For instance, the FCA recently signed a world-first Co-operation Agreement aided by 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 guide innovation and competition
The guidance is designed to dispel misconceptions about regulators’ opposition to your cloud and encourage innovation in this region.
It is designed to encourage greater utilization of behavioural and technology insights to supply communications which help people make effective decisions about services and products. The FCA is devoted to working with industry where a thought has strong potential to enhance consumer outcomes; the FCA may consider waiving or modifying disclosure rules where appropriate to facilitate this testing.
It is also looking at amending its Handbook to remove a number of disclosure requirements that have not been as potent as initially envisaged in terms of providing appropriate information to consumers.
2.5 Payment Systems Regulator (PSR )
Access to payment systems is an important driver of competition and innovation into the provision of payment services. Limited access is certainly considered a barrier to entry for new banks, e-money issuers along with other payments institutions, with all the concern that the pace of innovation in this certain area is just too slow.
A main objective is to exert effort proactively with small payments institutions and fintech firms to recognize where in fact the barriers to innovation exist, which feeds in to the PSR ’s policy development and implementation.
This consists of publishing annual reports to 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 way that supports competitive innovation, the PSR is conducting two market reviews:
The findings that are interim both reviews were published in February and March before the final reports later this present year. Depending on its findings, the PSR may implement remedies or undertake further policy strive to support competitive innovation.
Following engagement with all the wider payments community, the Forum developed its set that is initial of areas. This consists of:
- Greater control and assurance for end users
- Simplifying usage of marketplace for payment services providers
- An evaluation of how industry could work to detect and minimize financial crime
- An evaluation for the costs and benefits of account number portability