THE FINTECH sector should brace itself for a new wave of regulatory scrutiny this year due to concerns of harm to consumers and the financial system, a new report has warned.
KPMG UK research, published on Monday, highlighted a number of risks from fintech firms – including online lenders – that are concerning regulators.
These include herd-like behaviour that “may arise from the widespread use of similar machine learning and other strategies for lending or trading,” and a concern that non-bank providers of credit “may grow rapidly while not being regulated appropriately”.
Other risks included data privacy, lack of consumer understanding and the increasing burden of regulation of emerging technologies.
The accountancy giant noted that UK regulators are widening their net and sharpening their gaze on firms to look out for these risks. It highlighted the Financial Conduct Authority’s (FCA) P2P review as just one of almost 30 regulatory and supervisory initiatives taking place in recent years both in the UK and internationally.
“Around the world we are seeing different approaches to regulating fintech, but in the UK the direction of travel is consistent with what we have known to date: stringent,” Jon Holt, head of financial services at KPMG UK, said.
“Some wondered whether the changing world of technology could be an opportunity to reconsider the balance between consumer protection and consumer responsibility.
“But, in the UK, we wear robust regulation as a badge of honour and it is clear that regulators are turning to some familiar approaches when it comes to protecting consumers.
“Despite the bold, and ever changing world of technology, regulators continue to rely on demanding transparency; limiting the sale of products to retail customers; and re-writing conduct rules to apply to the latest fintech developments.”
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