Regulator urged to scrap ‘one size fits all’ approach
Smaller firms should not have to meet the same regulatory requirements as the largest firms and fintechs should have better support throughout the authorisation process, Innovate Finance has said.
The fintech trade body has submitted a response to the Treasury’s Call for Proposals on how to measure success in relation to the financial regulators’ new secondary objectives.
In its submission, Innovate Finance emphasised that supporting fintech innovation is key to ensuring the UK’s competitiveness.
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It has called for better resources and expertise in the regulator to understand and support innovation.
“These shall include: dedicated account managers for fintechs after they graduate from sandbox and growth programmes, providing them with the same ‘named contact’ supervisors that large incumbent institutions enjoy; more interchange between industry and the regulators (eg. secondments, joint training programmes and external hires); and faster authorisations to reduce delays in appointing key personnel and regulatory market approvals for fintechs,” Innovate Finance said.
It also called for move away from a ‘one size fits all’ approach to regulation, and a review of all existing consumer regulations to assess any duplication or contradiction with the new Consumer Duty.
Additionally, it proposed a new ‘regtech test’ when new regulations are introduced, to assess how technology can best enable regulatory compliance.
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“Over the last decade the UK has been the leading hub for fintech globally, supported by regulators who have embraced innovation,” said Janine Hirt, chief executive at Innovate Finance. “However, as other countries are catching up, we risk falling behind unless our regulators continue to innovate.
“The UK is one of the best places in the world to start and scale a finteh, driving talent, capital and international business into the UK economy. This is also determined by a dynamic and proportionate regulatory environment that can position the UK as the global epicentre for fintech.
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“As technology, and the fintechs who enable it, become central to financial services we need to see new regulatory approaches that support innovation. We also welcome new policies that can create more agile regulators that can protect both consumers and market competitiveness and enable innovation in financial services.”