In a new report – Enhancing the UK’s approach to innovation in Financial Services – lobby group TheCityUK calls on the Financial Conduct Authority, HM Treasury and Department for International Trade to work closely together to better co-ordinate oversight and develop a more consolidated, user friendly fintech rule book, particularly if the UK wants to maintain its global leadership.
Although regulators have shown leadership in driving forward a progressive approach to innovation in financial services, challenges around resource, delivery of support, integration and overseas expansion could be limiting the pace of change, according to the report, which was published in collaboration with PA Consulting. Moreover, it found that the UK’s regulatory materials are difficult to interpret which has made it difficult for fintech firms to effectively engage with the country’s policymakers.
The report estimates that the UK, which has roughly 1600 fintech firms and 76,500 workers, could reach 105,500 by 2030. The research was based on interviews with approximately 20 individuals holding senior roles at UK, European and US fintech firms, financial institutions and UK and US regulators.
To remedy the current situation, the report proposes creating guidebooks to UK rules, producing more easily navigable websites for officials and creating a “forum or alumni network” for sharing experiences of regulatory support. In addition, it suggests developing a broader set of accreditations for fintech companies as well as a regulatory sandbox suited to mid-sized and larger firms plus smaller start-ups.
The report also advocates strengthening the resources available to firms looking to expand overseas, to help them better understand regulatory frameworks and tax regimes
Miles Celic, Chief Executive Officer, TheCityUK, says “With the Covid-19 pandemic likely to fast-forward technological trends and adoption in all parts of the economy and globally, it is clear that the sector needs further regulatory support to take its growth to the next level.”
He adds, “The UK’s regulatory sandbox approach has been hugely successful and internationally acclaimed, but is starting to show limitations as the sector grows and matures. A broader framework needs to be developed with industry to reflect the expansion of the FinTech sector and ongoing regulatory development of maturing firms.”