FCA promises flexibility on Fintech regulation
The UK regulator has promised an ‘open mind’ on regulation of Fintech. Anna Wallace, Innovate Head of Department at the Financial Conduct Authority said it was adapting its processes to assess this fast-moving area, labelling it a ‘massive strategic priority’.
Speaking at the Boring Money Fin-k Tank conference, she said the asset management industry is lagging other financial services areas in adoption of technology, saying it had ‘lacked imagination’ to date. She would also like to see more innovation in technology serving the poorest end of society.
Wallace admitted that regulation could be a barrier to innovation, which is why the FCA is trying to take a more flexible approach. She added: “As we have grown and the market has grown, we’ve developed our business model, asking what we need to do to spur innovation. We’ve tried to help firms understand whether they need to be regulated and how they need to be regulated.”
However, she said this could be a challenge where technology and business models are largely untested. This was why the group set up the regulatory ‘sandbox’, which allows the FCA to get to know the technology and understand whether the consumer outcomes are as expected.
The FCA is trying to reverse the trend for ever-greater paperwork. Wallace said: “Smarter communications is a big driver and we have engaged with behavioural scientists to achieve this. Our aim is to simplify the documentation. The KIID documents are giving us new and useful information.”
However, investment groups shouldn’t expect a lighter touch. She added: “Let’s be clear that losing your pension or your investment pot because you don’t understand what it is investing in has a huge and detrimental effect. It is important there are safeguards. Nevertheless, we are happy to look at different guidance models and help firms deliver streamlined advice. Anything that can reduce costs without reducing standard is a good thing.”
The regulator has found those who use algorithms don’t always understand them properly. Wallace said she wanted to have an open conversation about it, rather than be prescriptive about what firms should be doing: “Companies don’t want a regulator telling them how to innovate. We’re the worst people to do it. However, we can be open-minded. There are risks, but we would urge firms to put their head above the parapet and come and talk to us.”
Notes to the Editors:
Fin-k Tank is a new one-day conference from Boringmoney.co.uk, designed to show the financial industry how technology can improve the world of savings and investments.
With particular focus on open banking, Blockchain, hybrid advice and Artificial Intelligence, Fin-k Tank combines talks, interviews and live demos to highlight best practices, developments and opportunities. Financial services largely lag behind other industries in consumer grade user experience and communication - Fin-K Tank aims to address this issue.
This is Boring Money’s second Fin-k Tank fintech event, after a successful half-day launch in December 2017. The event is sponsored by Altus Consulting and Aviva.
Project Innovate was started in October 2014 and offers a regulatory sandbox, direct support for innovative firms and an advice unit for forms developing automated advice and guidance models