Financial Conduct Authority (FCA) chief executive Nikhil Rathi has defended the regulator against accusations it is losing focus on fintech and said that it is working on the backlog of delayed authorisations.
Rathi made the comments during a Treasury Committee on 8 December 2021. The committee cited evidence from fintechs expressing concern the regulator has lost its focus in this area.
When quizzed on this Rathi highlighted that fintech continues to be an important part of the FCA’s work with the regulator hiring an executive leader from a fintech earlier this year.
Read more: FCA CEO defends proposed regulatory fee hike
“We haven’t lost focus on it,” he said.
“It continues to be an important part of our work. And if I look at the scale of investment in UK fintech which is at record levels, it shows there’s a healthy finance environment and business environment for fintech.
“In the last two weeks we published our final reviews on capital raising, in light of the Hill Review including some significant reviews of technology companies that wanted to access capital markets.
“Some described it as the biggest market reforms in a decade so technology companies can access the equity capital they need. I would say the focus remains. There’s a balance to be struck, when supporting fintech and innovation we have a set of issues we need to balance.”
The committee asked about authorisations taking longer than expected, another concern raised by fintechs.
Several peer-to-peer lending industry stakeholders have complained to Peer2Peer Finance News about long approval times and last week a survey found that nearly 70 per cent of financial services firms have described the City regulator’s authorisation process as unnecessarily long.
Rathi recognised that there is a backlog in the queues and said the FCA is working hard to address this by hiring more staff and digitalising the approval process.
Read more: FCA opens review of compensation scheme
“We’re in the process of appointing 100 new colleagues in those areas and over the medium term will make that process more digital and we hope over the next year we would crack most of those,” he said.
“I would also draw attention to recommendations from the Gloster Report and [we have] adopted some which included taking a more holistic view at the point of application, being more inquisitive, being more demanding and including looking at financial resilience as well.
“That necessarily means more grit in the system because we’ve learned the lesson if we allow a firm in at the gateway that’s not adequately meeting standards that can cause quite a lot of issues further down the track.
“And in the area of fintech we see a whole range of different firms, genuinely innovative and competitive ones we want to support and grow and others that are more challenging.”