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The us government announced in its Productivity Plan 2015 that departments is likely to be required to work with regulators to create innovation plans by spring 2016. This announcement reflects one of the keys government aim to ensure the UK is supporting the development of new business models and disruptive technologies, breaking down barriers to entry and boosting productivity. To do this the UK’s regulation and enforcement frameworks must be agile enough to respond flexibly to continuing developments in new technologies and disruptive business models.
The objective of this consultation would be to set out ongoing and proposed work to foster a supportive regulatory framework for financial services that enables innovation to flourish.
The innovation plan covers the job of the financial services regulators: Financial Conduct Authority (FCA ), Payment Systems Regulator (PSR ), Prudential Regulation Authority (PRA ) in addition to 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 services that are financial are better utilising new technologies to build efficiency savings and minimize burdens on business
This consultation invites comment on the task of financial services regulators to guide innovative technology and disruptive business models. We would also want to understand where there can be gaps in regulatory approach with regards to supporting innovation.
Draft innovation plan 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 world, delivering greater choice and value for consumers.
The federal government has recently taken significant action to reach this vision. This includes:
Creating the best environment that is regulatory particularly crucial that you make sure that innovative firms can compete and grow. To this end, HM Treasury has firmly embedded competition and innovation objectives within the landscape that is regulatory financial services through the key regulators’ objectives and remits.
2.2 How technology that is new shaping financial services
An integral focus of innovation in financial services in recent years could be the growth of fintech – technology solutions which deliver financial services, often in a more efficient and way that is customer-focused. For example, technology has enabled:
- consumers which will make payments via their smartphones
- the matching of consumers and businesses with money to truly save and invest with those who have to borrow
- personal insurance pricing based on the characteristics and behaviours of individual consumers
- the introduction of new currencies that are digital
The financial services sector is characterised by both new disruptive players and fintechs using the services of incumbents to provide 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 many regions of financial services – as an example, payments, peer-to-peer lending, big data analytics and robo-advice – as well as the possibility of technology to transform financial services is substantial. 25% of all of the fintechs globally come in the payments that are retail 1 .
The UK is the world-leader in fintech. An report that is independent 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 growing rap >2 .
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 disruptive business models in financial services.
The government’s priority is to make sure regulation is proportionate and promotes innovation, in the place of constrains or inhibits it. Indeed there are probably 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 )
It can help innovative firms get access to fast and frank feedback on the regulatory implications of the concepts, plans and choices. It seeks to tackle the issues that are structural impede the progress of innovators going into the market.
Section of Project Innovate could be the Innovation Hub which helps new and businesses that are establishedboth regulated and non-regulated) introduce innovative lending options and services to your market. The Innovation Hub also identifies areas where the regulatory framework needs to conform 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 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 authorisation process that is innovate.
- using the services of government on its intends to introduce anti-money laundering regulation for digital currency exchanges, to deliver 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 associated with issue of disproportionate de-risking, which denies businesses access to banking facilities, and exactly how the FCA might influence firms to take a more approach that is proportionate
- using informal steers on proposed innovations make it possible for more direct communication with firms
Great britain attracts fintech innovators from about the planet – many choose to base themselves into the UK, not just to be part of a captivating local ecosystem, but also 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 touch with the proper regulators when they turn to start business that is doing other regulatory jurisdictions
- Stand prepared to help non-UK innovators interested in going into the UK market
- Seeks co-operation agreements with key regulators. For example, the FCA recently signed a co-operation that is world-first using the Australian regulator, ASIC, to facilitate the referral of innovative firms between their respective innovation hubs
- Promotes pro-innovation regulatory approaches to standard-setters that are international
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 aims to encourage greater utilization of technology and behavioural insights to supply communications which help people make effective decisions about services and products. The FCA is dedicated to using the services of industry where an idea has strong potential to improve consumer outcomes; the FCA may consider waiving or modifying disclosure rules where appropriate to facilitate this write my paper testing.
Additionally, it is taking a look at amending its Handbook to get rid of a wide range of disclosure requirements which have not been as potent as initially envisaged with regards to providing appropriate information to consumers.
2.5 Payment Systems Regulator (PSR )
Access to 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 and other payments institutions, because of the concern that the pace of innovation in this area is just too slow.
A main objective is to your workplace proactively with small payments institutions and fintech firms to determine where in fact the barriers to innovation exist, which feeds in to the PSR ’s policy development and implementation.
This includes publishing reports that are annual assess each scheme’s compliance, which includes areas where the PSR expects to see improvements. The PSR will consider further regulatory action if 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 findings that are interim both reviews were published in February and March ahead of the final reports later this current year. According to its findings, the PSR may implement remedies or undertake further policy strive to support innovation that is competitive.
Following engagement aided by the wider payments community, the Forum developed its initial collection of priority areas. This includes:
- Greater assurance and control for end users
- Simplifying access to market for payment services providers
- An assessment of how industry can perhaps work to detect and reduce financial crime
- An assessment for the costs and benefits of account number portability