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The us government announced with its Productivity Plan 2015 that departments will likely be required to work with regulators to write innovation plans by spring 2016. This announcement reflects the main element government make an effort 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 achieve 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 purpose of this consultation would be to lay out ongoing and proposed work to foster a supportive regulatory framework for financial services that 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 ) 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 generate efficiency savings and minimize burdens on business
This consultation invites touch upon the job of financial services regulators to guide technology that is innovative disruptive business models. We would also prefer to understand where there could be gaps in regulatory approach in terms of supporting innovation.
Draft innovation policy 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 on earth, delivering greater choice and value for consumers.
The government has already taken action that is significant reach this vision. This can include:
Creating the right regulatory environment is particularly important to ensure that innovative firms can compete and grow. To the end, HM Treasury has firmly embedded competition and innovation objectives within the landscape that is regulatory financial services through the primary regulators’ objectives and remits.
2.2 How technology that is new shaping financial services
A vital focus of innovation in financial services in the last few years is the growth of fintech – technology solutions which deliver financial services, often in an even more efficient and customer-focused way. For example, technology has enabled:
- consumers to 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 in line with the characteristics and behaviours of individual consumers
- the introduction of new digital currencies
The services that are financial is characterised by both new disruptive players and fintechs working together with incumbents to provide 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 a lot of areas of financial services – for instance, 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 of the fintechs globally come in the retail payments industry 1 .
The united kingdom 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 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 intends to support and promote innovation, facilitating the development of new technologies and disruptive business models in financial services.
The government’s priority is always to make certain that regulation is proportionate and promotes innovation, in the place of constrains or inhibits it. Indeed you can find apt to be some aspects of existing regulation, developed well before digital and advances that are technological that may 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. Moreover 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 which helps new and businesses that are establishedboth regulated and non-regulated) introduce innovative lending options and services to the market. The Innovation Hub also identifies places where the framework that is regulatory to adjust to enable further innovation into 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 provides 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 with government on its intends to introduce anti-money laundering regulation for digital currency exchanges, to present a supportive environment for legitimate digital currency users and businesses, and produce a hostile environment for illicit users
- making a statement looking at the extent of this dilemma of disproportionate de-risking, which denies businesses use of banking facilities, and exactly how the FCA might influence firms to take a more proportionate approach
- using informal steers on proposed innovations make it possible for more direct communication with firms
The UK attracts fintech innovators from around the world – many choose to base themselves within the UK, not just to be part of an exciting ecosystem that is local but additionally because they look at 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 right regulators if they aim to start business that is doing other regulatory jurisdictions
- Stand ready to help innovators that are non-UK in entering the UK market
- Seeks co-operation agreements with key regulators. For example, 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 solutions to standard-setters that are international
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 area.
It aims to encourage greater use of technology and behavioural insights to supply communications that help people make effective decisions about services and products. The FCA is focused on using the services of industry where an idea has strong potential to enhance consumer outcomes; the FCA may consider waiving or modifying disclosure rules where appropriate to facilitate this testing.
Additionally, it is taking a look at amending its Handbook to remove an amount of disclosure requirements which have not been as effectual as initially envisaged with regards to providing appropriate information to consumers.
2.5 Payment Systems Regulator (PSR )
Usage of payment systems is an driver that is important of and innovation when you look at the provision of payment services. Limited access is definitely considered a barrier to entry for new banks, e-money issuers as well as other payments institutions, aided by the concern that the pace of innovation in this certain area is too slow.
A objective that is main to work proactively with small payments institutions and fintech firms to recognize where the barriers to innovation exist, which feeds into the PSR ’s policy development and implementation.
This consists of 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 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 essay writers that supports competitive innovation
The interim findings for both reviews were published in February and March ahead of the final reports later in 2010. Depending on its findings, the PSR may implement remedies or undertake further policy strive to support competitive innovation.
Following engagement because of the wider payments community, the Forum developed its initial pair of priority areas. This can include:
- Greater assurance and control for end users
- Simplifying use of market for payment services providers
- An evaluation of how industry could work to detect and reduce crime that is financial
- An evaluation associated with costs and advantages of account number portability