THE FINANCIAL Conduct Authority (FCA) has cited its regulation of peer-to-peer lending as an example of its approach to balancing competition and innovation.
The City watchdog has launched two consultation documents to seek views on how well its approach to competition and authorisation is understood.
It comes as P2P firms have spent much of this year awaiting the outcome of regulatory applications, with some complaining of delays.
The regulator said it has received almost 75,000 applications from firms wanting to provide regulated financial services in 2016-2017.
The FCA said it was keen to promote new entrants and choice for consumers, citing its regulatory sandbox as an example, but warned it has to balance encouraging competition and innovation and advancing other operational objectives of consumer protection and market integrity.
“Often we can take steps to improve competition without affecting consumer protection, market integrity or financial stability,” it said.
“But at other times we must strike a balance between allowing new firms to enter and innovate, and preventing harm – as with our work on crowdfunding and peer-to-peer lending.”
The FCA is also asking whether there is a clear understanding of the threshold conditions that firms and whether it is clear on how long the process will take.
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“As part of our mission, we committed to being more open and transparent about how we regulate and how we make decisions,” Andrew Bailey (pictured), chief executive of the FCA, said.
“Authorisation is the gateway for firms that want to operate in the financial services industry. We use it to prevent harm from occurring by ensuring that all firms meet our minimum standards before they are allowed to start doing business. It’s vital that we get it right to keep out firms that are not up to scratch and allow the right ones through.
“Effective competition in financial services benefits consumers and firms. We are one of the few financial regulators in the world with a core objective to promote competition and it applies to all the work we do.”
Both approach documents are open for consultation until 12 March 2018.
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