THE FINANCIAL Conduct Authority (FCA) is pushing for an international regulatory framework to head off a fintech “Wild West”, the city watchdog’s head of strategy and competition said on Monday.
Setting international standards for the booming fintech sector will be key in ensuring it does not suffer reputational setbacks, Christopher Woolard warned at the Innovate Finance Global Summit 2017.
“As different jurisdictions begin to set up their own sandboxes, with different models and standards, some believe a ‘Wild West’ version could emerge,” he said.
“This runs entirely counter to our ambitions, which we know many share, for responsible innovation, which, rather than risk diminishing outcomes for consumers, should enhance them. We also believe that a sandbox that fails to prepare firms to join the regulated market will not foster firms that succeed long-term.
“We also see potential risks to the reputation of and trust in financial innovation if there are examples of global failures in the future.”
Setting out a common framework for innovation best practices will help to fend off rule fragmentation and secure the long-term future of the industry, Woolard explained in his speech.
“A significant focus for us will be seeking to develop this consensus through bodies like the G20 and IOSCO,” he said.
Woolard also warned that the Brexit referendum last June dealt a tough blow to the UK fintech industry, with the number of start-ups seeking to operate in the country falling after the historical date.
“Indeed we did see a dip and it’s worth reflecting on the fact that we live in an uncertain climate and nothing can be taken for granted,” he said.
Requests for support by fintech companies surged by 20 per cent in the nine months following the Brexit vote, he added.
“We are working more deeply with innovators than this time last year,” said the regulation official.
“For example we received 77 applications for the second cohort of our sandbox, more than applied for cohort one.
“And I can announce today that we will be accepting 31 of these applications to progress towards testing, nearly double the number of firms currently testing in our first cohort. That means more innovative firms, trialling more innovative propositions to bring to the market.”
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