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Background

The us government announced in its Productivity Plan 2015 that departments will undoubtedly be needed to work with regulators to publish innovation plans by spring 2016. This announcement reflects the main element government make an effort to make sure the UK is supporting the growth of new business models and disruptive technologies, breaking down barriers to entry and boosting productivity. To get this done 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 purpose of this consultation would be to put down ongoing and work that is proposed foster a supportive regulatory framework for financial services which allows innovation to flourish.

The innovation plan covers the work regarding the services that are financial: Financial Conduct Authority (FCA ), Payment Systems Regulator (PSR ), Prudential Regulation Authority (PRA ) plus 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 minimize burdens on business

This consultation invites touch upon the job of financial services regulators to support technology that is innovative disruptive business models. We would also like to understand where there could be gaps in regulatory approach in terms of 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 field, delivering greater choice and value for consumers.

The federal government has already taken action that is significant reach this vision. This includes:

Creating the proper environment that is regulatory particularly vital that you make sure that innovative firms can compete and grow. To the 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 technology that is new shaping financial services

A vital focus of innovation in financial services in the past few years may be the development of fintech – technology solutions which deliver financial services, often in a more efficient and way that is customer-focused. For instance, technology has enabled:

• consumers which will make payments via their smartphones
• the matching of consumers and businesses with money to save lots of and invest with people who have to borrow
• personal insurance pricing based on the characteristics and behaviours of individual consumers
• the development of new digital currencies

The services that are financial is characterised by both new disruptive players and fintechs working with incumbents to supply 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 aspects of financial services – as an example, payments, peer-to-peer lending, big data analytics and robo-advice – as well as the potential for 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 independent report from Ernst and Young (EY) published in February ranked the UK while 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 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 that regulation is proportionate and promotes innovation, in the place of constrains or inhibits it. Indeed you can find apt to be some regions of existing regulation, developed well before digital and technological advances https://essaywritersite.com/, which may now be acting as a barrier to innovation.

2.4 Financial Conduct Authority (FCA )

Project Innovate

It will help innovative firms get access to fast and frank feedback on the regulatory implications of the concepts, plans and choices. In addition seeks to tackle the issues that are structural impede the progress of innovators going into 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 your market. The Innovation Hub also identifies places where the regulatory framework needs to adapt to enable further innovation when you look at the interests of consumers.

Up to now, Project Innovate has helped over 250 firms, 18 of which were authorised to undertake regulated activities. It gives an experience that is end-to-end 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 plans to introduce anti-money laundering regulation for digital currency exchanges, to provide a environment that is supportive legitimate digital currency users and businesses, and create a hostile environment for illicit users
• making a statement looking at the extent associated with the dilemma of disproportionate de-risking, which denies businesses use of banking facilities, and just how the FCA might influence firms to take an even more proportionate approach
• using informal steers on proposed innovations make it possible for more communication that is direct firms

Great britain attracts fintech innovators from about the whole world – many choose to base themselves in the UK, not just to be part of an exciting local ecosystem, but in addition since they begin to 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 best regulators when they aim to start business that is doing other regulatory jurisdictions
• Stand ready to help non-UK innovators interested in entering the UK market
• Seeks co-operation agreements with key regulators. As an example, the FCA recently signed a co-operation that is world-first with all 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 support competition and innovation

The guidance aims to dispel misconceptions about regulators’ opposition towards the cloud and encourage innovation in this area.

It aims to encourage greater use of behavioural and technology insights to deliver communications that help people make effective decisions about products and services. The FCA is invested in dealing with industry where a thought has strong potential to boost consumer outcomes; the FCA may consider waiving or disclosure that is modifying where appropriate to facilitate this testing.

It is also taking a look at amending its Handbook to remove a wide range of disclosure requirements which have not been as effectual as initially envisaged with regards to providing information that is appropriate consumers.

2.5 Payment Systems Regulator (PSR )

Access to payment systems is an driver that is important of and innovation when you look at the provision of payment services. Limited access is certainly considered a barrier to entry for new banks, e-money issuers and other payments institutions, with all the concern that the pace of innovation in this area is simply too slow.

A main objective is to your workplace proactively with small payments institutions and fintech firms to spot where the barriers to innovation exist, which feeds to the PSR ’s policy development and implementation.

Competitive innovation

This consists of 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.

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 in 2010. According to its findings, the PSR may implement remedies or undertake further policy work to support competitive innovation.

Collaborative innovation

Following engagement using the wider payments community, the Forum developed its initial pair of priority areas. This can include:

• Greater control and assurance for end users
• Simplifying access to marketplace for payment services providers
• An evaluation of how industry can work to detect and reduce crime that is financial
• An assessment associated with costs and benefits of account number portability