Consultation paper on draft innovation policy for financial services
Where we have identified any 3rd party copyright information you will have to obtain permission through the copyright holders concerned.
The federal government announced with its Productivity Plan 2015 that departments is likely to be expected to make use of regulators to create innovation plans by spring 2016. This announcement reflects the key government try to make sure the UK is supporting the growth of start up business models and disruptive technologies, wearing down barriers to entry and productivity that is boosting. For this the UK’s regulation and enforcement frameworks must certanly be agile adequate to respond flexibly to continuing developments in new technologies and business that is disruptive.
The purpose of this consultation is to https://eliteessaywriters.com lay out ongoing and work that is proposed foster a supportive regulatory framework for financial services that allows innovation to flourish.
The innovation plan covers the task of this 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 key issues:
- How new technology is 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 touch upon the work of financial services regulators to guide technology that is innovative disruptive business models. We might also prefer to understand where there might be gaps in regulatory approach with regards to innovation that is supporting.
Draft innovation arrange for financial services
2.1 Innovation and regulation
The vision that is government’s for UK financial services to be the most competitive and innovative on earth, delivering greater choice and value for consumers.
The us government has recently taken action that is significant reach this vision. This consists of:
Creating the right environment that is regulatory 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 key regulators’ objectives and remits.
2.2 How new technology is shaping financial services
An integral focus of innovation in financial services in recent years is the growth of fintech – technology solutions which deliver financial services, often in an even more efficient and way that is customer-focused. For instance, 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 those that need certainly to borrow
- personal insurance pricing in line with 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 produce more innovative services and products through existing networks and infrastructure.
The fintech sector is diverse: from small dynamic start-ups to more established players. Fintechs operate in a lot of areas of financial services – as an example, payments, peer-to-peer lending, big data analytics and robo-advice – plus the prospect of technology to change financial services is substantial. 25% of all fintechs globally come in the retail payments industry 1 .
Great britain is the world-leader in fintech. An report that is independent Ernst and Young (EY) published in February ranked the UK once 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 growing rap >2 .
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 disruptive business models in financial services.
The government’s priority would be to ensure that regulation is proportionate and promotes innovation, as opposed to constrains or inhibits it. Indeed there are apt to be some regions of existing regulation, developed well before digital and technological advances, which might now be acting as a barrier to innovation.
2.4 Financial Conduct Authority (FCA )
It will help innovative firms gain access to fast and feedback that is frank the regulatory implications of the concepts, plans and choices. It seeks to tackle the issues that are structural impede the progress of innovators entering the market.
Element of Project Innovate may be the Innovation Hub that will help new and businesses that are establishedboth regulated and non-regulated) introduce innovative financial loans and services to your market. The Innovation Hub also identifies areas where the regulatory framework needs to conform to enable further innovation within the interests of consumers.
To date, Project Innovate has helped over 250 firms, 18 of which were authorised to undertake regulated activities. It offers 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 Innovate authorisation process.
- working with government on its plans to introduce anti-money laundering regulation for digital currency exchanges, to provide a supportive environment for legitimate digital currency users and businesses, and produce 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 how the FCA might influence firms to take a more proportionate approach
- using informal steers on proposed innovations to allow more direct communication with firms
Great britain attracts fintech innovators from about the whole world – many choose to base themselves within the UK, not just to be part of an exciting local ecosystem, but in addition simply because they see the UK as a springboard to launch their businesses or products internationally and bolster their competitiveness.
The FCA as part of this work
- Helps put UK-based innovators in contact with the proper regulators if they turn to start conducting business in other regulatory jurisdictions
- Stand ready to help innovators that are non-UK in entering the UK market
- Seeks co-operation agreements with key regulators. As an example, the FCA recently signed a world-first Co-operation Agreement using 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 aid innovation and competition
The guidance aims to dispel misconceptions about regulators’ opposition to the encourage and cloud innovation in this area.
It is designed 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 devoted to working with industry where a thought has strong potential to boost 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 quantity of disclosure requirements that have not been as potent as initially envisaged in terms of providing information that is appropriate consumers.
2.5 Payment Systems Regulator (PSR )
Use of payment systems is an driver that is important of and innovation within the provision of payment services. Limited access is certainly considered a barrier to entry for new banks, e-money issuers as well as other payments institutions, using the concern that the pace of innovation in this area is too slow.
A main objective is to get results proactively with small payments institutions and fintech firms to spot where in actuality the barriers to innovation exist, which feeds into the PSR ’s policy development and implementation.
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 action that is regulatory improvements are not made.
The PSR is conducting two market reviews to ensure that the market is operating in a way that supports competitive innovation
The interim findings for both reviews were published in February and March ahead of the final reports later this year. Dependent on its findings, the PSR may implement remedies or undertake further policy strive to support innovation that is competitive.
Following engagement because of 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 can work to detect and minimize crime that is financial
- An evaluation associated with the costs and benefits of account number portability