Consultation paper on draft innovation arrange for financial services
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Background
The government announced in its Productivity Plan 2015 that departments is supposed to be required to make use of regulators to publish innovation plans by spring 2016. This announcement reflects the key government aim to make sure the UK is supporting the development of home based business models and disruptive technologies, breaking down barriers to entry and boosting productivity. To do this the UK’s regulation and enforcement frameworks must certanly be agile enough to respond flexibly to continuing developments in new technologies and disruptive business models.
The goal of this consultation is always to set out ongoing and work that is proposed foster a supportive regulatory framework for financial services which allows innovation to flourish.
The innovation plan covers the job for the services that are financial: Financial Conduct Authority (FCA ), Payment Systems Regulator (PSR ), Prudential Regulation Authority (PRA ) in addition to wider Bank of England.
The innovation plan essay writing service websites covers three key issues:
- 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 create efficiency savings and minimize burdens on business
This consultation invites touch upon the work of financial services regulators to aid innovative technology and disruptive business models. We might also love to understand where there can be gaps in regulatory approach when it comes to innovation that is supporting.
Draft innovation arrange for financial services
2.1 Innovation and regulation
The government’s vision is for UK financial services to function as the most competitive and innovative in the field, delivering greater choice and value for consumers.
The government has recently taken action that is significant reach this vision. This consists of:
Creating the best regulatory environment is particularly vital that you make sure 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 main regulators’ objectives and remits.
2.2 How new technology is shaping financial services
A vital focus of innovation in financial services in recent years is the growth of fintech – technology solutions which deliver financial services, often in a far more efficient and customer-focused way. For example, technology has enabled:
- consumers to create payments via their smartphones
- the matching of consumers and businesses with money to save and invest with those that need to borrow
- personal insurance pricing based on 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 dealing with incumbents to provide 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 – for instance, payments, peer-to-peer lending, big data analytics and robo-advice – as well as the prospect of technology to transform financial services is substantial. 25% of all of the fintechs globally come in the payments that are retail 1 )
Great britain is the world-leader in fintech. An report that is independent Ernst and Young (EY) published in February ranked the UK whilst 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 plans to support and promote innovation, facilitating the introduction of new technologies and business that is disruptive in financial services.
The government’s priority is to make certain that regulation is proportionate and promotes innovation, as opposed to constrains or inhibits it. Indeed you can find apt to be some areas of existing regulation, developed long before digital and technological advances, that might now be acting as a barrier to innovation.
2.4 Financial Conduct Authority (FCA )
Project Innovate
It will help innovative firms gain access to fast and feedback that is frank the regulatory implications of these concepts, plans and choices. It seeks to tackle the structural problems that impede the progress of innovators going into the market.
Section of Project Innovate is the Innovation Hub that will help new and businesses that are establishedboth regulated and non-regulated) introduce innovative financial products and services towards the market. The Innovation Hub also identifies areas where the framework that is regulatory to conform to enable further innovation when you look at the interests of consumers.
Up to now, Project Innovate has helped over 250 firms, 18 of that have been authorised to undertake regulated activities. It provides an end-to-end experience for 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.
- dealing with government on its intends to introduce anti-money laundering regulation for digital currency exchanges, to give a environment that is supportive legitimate digital currency users and businesses, and produce a hostile environment for illicit users
- making a statement studying the extent of this problem of disproportionate de-risking, which denies businesses use of banking facilities, and just how the FCA might influence firms to take a far more approach that is proportionate
- using informal steers on proposed innovations to allow more direct communication with firms
The united kingdom attracts fintech innovators from about the world – many choose to base themselves when you look at the UK, not only to be part of a vibrant ecosystem that is local but in addition simply because they look at UK as a springboard to launch their businesses or products internationally and bolster their competitiveness.
Included in this work the FCA :
- Helps put UK-based innovators in contact with just the right regulators when they turn to start doing business in other regulatory jurisdictions
- Stand ready to help non-UK innovators interested in going into the UK market
- Seeks co-operation agreements with key regulators. As an example, the FCA recently signed a co-operation that is world-first aided by 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 cloud and encourage innovation in this area.
It is designed to encourage greater usage of behavioural and technology insights to supply communications which help people make effective decisions about services and products. The FCA is invested in working with industry where a concept has strong potential to boost consumer outcomes; the FCA may consider waiving or disclosure that is modifying where appropriate to facilitate this testing.
Additionally it is looking at amending its Handbook to get rid of a number 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 )
Use of payment systems is an important driver of competition and innovation in the provision of payment services. Limited access is definitely considered a barrier to entry for new banks, e-money issuers and other payments institutions, aided by the concern that the pace of innovation in this area is just too slow.
A main objective is to work proactively with small payments institutions and fintech firms to identify where in fact the barriers to innovation exist, which feeds into the PSR ’s policy development and implementation.
Competitive innovation
This includes publishing annual reports to assess each scheme’s compliance, which includes places 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 prior to the final reports later this season. Based on its findings, the PSR may implement remedies or undertake further policy work to support innovation that is competitive.
Collaborative innovation
Following engagement because of 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 market for payment services providers
- An assessment of how industry can perhaps work to detect and reduce crime that is financial
- An assessment associated with costs and advantages of account number portability