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Background
The us government announced in its Productivity Plan 2015 that departments is going to be expected to work with regulators to publish innovation plans by spring 2016. This announcement reflects the important thing government try to ensure the UK is supporting the growth of home based 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 needs to be agile enough to respond flexibly to continuing developments in new technologies and disruptive business models.
The goal of this consultation is to put down ongoing and work that is proposed foster a supportive regulatory framework for financial services that allows innovation to flourish.
The innovation plan covers the job for the services that are financial: 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 disruptive business models to encourage growth
- How services that are financial are better utilising new technologies to create efficiency savings and minimize burdens on business
This consultation invites comment on the work of financial services regulators to aid technology that is innovative disruptive business models. We would also want to understand where there could be gaps in regulatory approach with regards to supporting innovation.
Draft innovation policy for financial services
2.1 Innovation and regulation
The government’s vision is for UK financial services to be the most competitive and innovative on the planet, delivering greater choice and value for consumers.
The government has recently taken significant action to reach this vision. This can include:
Creating the proper environment that is regulatory particularly vital that you make sure that innovative firms can compete and grow. For this end, HM Treasury has firmly embedded competition and innovation objectives in the regulatory landscape for financial services through the primary regulators’ objectives and remits.
2.2 How new technology is shaping financial services
An integral focus of innovation in financial services in the last few years 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 help make payments via their smartphones
- the matching of consumers and businesses with money to truly save and invest with people who need to borrow
- personal insurance pricing in line with the characteristics and behaviours of individual consumers
- the development of new currencies that are digital
The services that are financial is characterised by both new disruptive players and fintechs dealing with incumbents to produce more innovative products and services through existing networks and infrastructure.
The sector that is fintech diverse: from small dynamic start-ups to more established players. Fintechs operate in many regions of financial services – for instance, payments, peer-to-peer lending, big data analytics and robo-advice – plus the possibility of technology to change financial services is substantial. 25% of most fintechs globally come in the retail payments industry 1 )
Great britain may be the world-leader in fintech. An report that is independent Ernst and Young (EY) published in February ranked the united kingdom because the leading fintech centre on the planet – 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 plans to support and promote innovation, facilitating the introduction of new technologies and disruptive business models in financial services.
The government’s priority is to ensure that regulation is proportionate and promotes innovation, as opposed to constrains or inhibits it. Indeed you can find probably be some regions 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 )
Project Innovate
It can help innovative firms gain access to fast and frank feedback on the regulatory implications of these concepts, plans and choices. It also seeks to tackle the issues that are structural impede the progress of innovators entering the market.
Part of Project Innovate may be the Innovation Hub which helps new and businesses that are establishedboth regulated and non-regulated) introduce innovative financial products and services to your market. The Innovation Hub also identifies areas where the regulatory framework needs to adapt to enable further innovation within the interests of consumers.
Up to now, Project Innovate has helped over 250 firms, 18 of that have been authorised to undertake regulated activities. It gives an end-to-end experience for new entrants. Firms that receive initial support from the Innovation Hub have their applications for authorisation handled via a specialised Project authorisation process that is innovate.
- working together with government on its intends to introduce anti-money laundering regulation for digital currency exchanges, to produce a supportive environment for legitimate digital currency users and buy essay uk businesses, and produce a hostile environment for illicit users
- making a statement taking a look at the extent associated with problem of disproportionate de-risking, which denies businesses access to banking facilities, and how the FCA might influence firms to take a far more proportionate approach
- using informal steers on proposed innovations to allow more direct communication with firms
Great britain attracts fintech innovators from about the entire world – many decide to base themselves when you look at the UK, not just to be part of a captivating local ecosystem, but in addition because they begin to see the UK as a springboard to launch their businesses or products internationally and bolster their competitiveness.
Included in this work the FCA :
- Helps put UK-based innovators in contact with the best regulators when they check out 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. As an example, the FCA recently signed a world-first Co-operation Agreement with all the Australian regulator, ASIC, to facilitate the referral of innovative firms between their respective innovation hubs
- Promotes pro-innovation regulatory answers to standard-setters that are international
Other initiatives to aid competition and innovation
The guidance aims to dispel misconceptions about regulators’ opposition to your cloud and encourage innovation in this region.
It aims to encourage greater use of behavioural and technology insights to supply communications that help people make effective decisions about products and services. The FCA is focused on working with industry where an idea has strong potential to improve consumer outcomes; the FCA may consider waiving or disclosure that is modifying where appropriate to facilitate this testing.
Additionally, it is taking a look at amending its Handbook to remove an amount 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 )
Usage of payment systems is an important driver of competition and innovation in the provision of payment services. Limited access has long been considered a barrier to entry for brand new banks, e-money issuers and other payments institutions, aided by the concern that the pace of innovation in this certain area is just too slow.
A objective that is main to function proactively with small payments institutions and fintech firms to spot in which the barriers to innovation exist, which feeds into the PSR ’s policy development and implementation.
Competitive innovation
This includes publishing reports that are annual assess each scheme’s compliance, which include areas where the PSR expects to see improvements. The PSR will consider further regulatory action if improvements are not made.
To ensure the marketplace 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 ahead of the final reports later this year. Based on its findings, the PSR may implement remedies or undertake further policy strive to support competitive innovation.
Collaborative innovation
Following engagement with all the wider payments community, the Forum developed its initial collection of priority areas. This includes:
- Greater control and assurance for end users
- Simplifying use of marketplace for payment services providers
- An assessment of how industry can work to detect and reduce crime that is financial
- An assessment associated with the costs and great things about account number portability