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Consultation paper on draft innovation plan for financial services « Jamais Vu Jamais Vu

Consultation paper on draft innovation plan for financial services

Consultation paper on draft innovation plan for financial services

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The us government announced with its Productivity Plan 2015 that departments will likely be expected to work with regulators to write innovation plans by spring 2016. This announcement reflects one of the keys government try to ensure the UK is giving support to the growth of start up business models and disruptive technologies, breaking down barriers to entry and productivity that is boosting. To work on this the UK’s regulation and enforcement frameworks must be agile adequate to respond flexibly to continuing developments in new technologies and business that is disruptive.

The purpose of this consultation is to lay out ongoing and proposed work to foster a supportive regulatory framework for financial services which allows innovation to flourish.

The innovation plan covers the work associated with 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 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 financial services regulators are better utilising new technologies to create efficiency savings and reduce burdens on business

This consultation invites comment on the work of financial services regulators to support technology that is innovative disruptive business models. We might also want to understand where there might be gaps in regulatory approach in terms of supporting innovation.

Draft innovation arrange for financial services

2.1 Innovation and regulation

buy essay

The vision that is government’s for UK financial services to function as most acceptable and innovative in the world, delivering greater choice and value for consumers.

The us government has already taken significant action to reach this vision. This includes:

Creating just the right environment that is regulatory particularly important to 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 new technology is shaping financial services

A vital focus of innovation in financial services in the last few years is the development of fintech – technology solutions which deliver financial services, often in a more efficient and way that is customer-focused. As an example, technology has enabled:

  • consumers to help make payments via their smartphones
  • the matching of consumers and businesses with money to save lots of and invest with those that 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 dealing with incumbents to deliver 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 many aspects of financial services – for instance, payments, peer-to-peer lending, big data analytics and robo-advice – plus the prospect of technology to transform financial services is substantial. 25% of all of the fintechs globally come in the retail payments industry 1 .

The UK may be the world-leader in fintech. An report that is independent Ernst and Young (EY) published in February ranked great britain as the leading fintech centre on the planet – 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 would be to make certain that regulation is proportionate and promotes innovation, as opposed to constrains or inhibits it. Indeed there are apt to be some aspects of existing regulation, developed long before digital and advances that are technological which might 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 feedback that is frank the regulatory implications of the concepts, plans and choices. In addition it seeks to tackle the issues that are structural impede the progress of innovators entering the market.

Section of Project Innovate may be the Innovation Hub which helps new and businesses that are establishedboth regulated and non-regulated) introduce innovative financial products and services to your market. The Innovation Hub also identifies areas where the framework that is regulatory to adjust to enable further innovation within 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.

  • working together with government on its plans to introduce anti-money laundering regulation for digital currency exchanges, to give a supportive environment for legitimate digital currency users and businesses, and create a hostile environment for illicit users
  • making a statement studying the extent associated with the dilemma of disproportionate de-risking, which denies businesses access to banking facilities, and exactly how the FCA might influence firms to take an even 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 world – many decide to base themselves in the UK, not only to engage in a captivating local ecosystem, but also 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 touch with the best regulators once they check out start business that is doing other regulatory jurisdictions
  • Stand ready to help innovators that are non-UK 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 utilizing the Australian regulator, ASIC, to facilitate the referral of innovative firms between their respective innovation hubs
  • Promotes pro-innovation regulatory methods to standard-setters that are international

Other initiatives to support competition and innovation

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

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 dedicated to working with industry where a concept has strong potential to boost consumer outcomes; the FCA may consider waiving or modifying disclosure rules where appropriate to facilitate this testing.

Additionally it is looking at amending its Handbook to remove a number of disclosure requirements that have not been as effectual as initially envisaged in terms of 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 in the provision of payment services. Limited access is certainly 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 main objective is be effective proactively with small payments institutions and fintech firms to spot where the barriers to innovation exist, which feeds in 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 places where the PSR expects to see improvements. The PSR will consider further regulatory action if improvements are not made.

To ensure the market is operating in a fashion that supports competitive innovation, the PSR is conducting two market reviews:

The interim findings for both reviews were published in February and March ahead of the final reports later this present year. According to its findings, the PSR may implement remedies or undertake further policy work to support innovation that is competitive.

Collaborative innovation

Following engagement with the wider payments community, the Forum developed its set that is initial of areas. This can include:

  • Greater control and assurance for end users
  • Simplifying use of market for payment services providers
  • An assessment of how industry could work to detect and minimize crime that is financial
  • An evaluation associated with the costs and advantages of account number portability

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