fintech

FCA to continue work on RegTech




The Financial Conduct Authority (FCA) has revealed it is to continue to help promote fintech within the financial services industry.

The announcement came at the Westminster Business Forum at Moorgate Place in London last week, which looked at fintech in the UK and the next steps for investment, skills and regulation.

Last year, Bridging & Commercial found that the FCA had spent £1.8m on Project Innovate, with just over £90,000 going towards the regulatory sandbox, which was set up to provide a safe space for businesses to test new products and services.

Speaking at the forum, Bob Ferguson, head of department for Project Innovate at the FCA, said RegTech was an area of great potential which had yet to be fully realised. 

“We are there for everyone who is innovative and looks to be doing something to inject better competition into the UK market for financial services.

“If there are ways [of] using technology [to reduce] the expense and the challenge of complying with customer identification and customer due diligence, then I think it is really important that regulators should be open to the idea of these propositions and that the market should be able to generate ideas and to explore them with the regulators.

“So our work on RegTech will certainly also continue this year.”

Bob was asked whether fintech firms felt that the FCA had been slowing down innovation through regulation, but said he had seen a number of firms actually embrace regulation.

“Regulation is still regulation, but something which surprised me when we took very extensive soundings – and obviously we continue to engage very closely with the ecosystem and the consistent feedback we’ve had – is that there is a huge demand for communication.

“It is a demand for that personalised, bespoke communication that we aim to deliver through Project Innovate and I’ve heard much less about chafing against this rule or that rule.

“So Project Innovate is primarily about that engagement and that one-to-one communication.”

The FCA’s regulatory sandbox was praised by Michael Harte, group head of innovation at Barclays.

When asked about major banks such as Barclays working with fintech specialists, Michael said that without the regulator it would not have made as much progress.

“We have had to determine who is friend or foe in the form of competition and partnership and they too have had to work out whether to trust the larger institutions. 

“That intermediation has come from the third party, ie the regulator, with the sandbox and the very nature and principle of the sandbox where firms can work together and play with ideas.

“After four or five years of awkward dancing between the Goliath and David and not really trusting one another and trying to control each other, in comes the third party with the new power of the regulatory sandbox making much better advances.”

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