The FCA has published a speech by Nikhil Rathi, FCA Chief Executive, on financial innovation, titled “Levelling the playing field – innovation in the service of consumers and the market”.
Delivered at the FinTech Week event, the speech focused on the need to level the playing field in financial innovation in the service of consumers and the market.
Regulatory open-mindedness explains the success in financial innovation. In particular, Mr Rathi referred to the impact of regulatory support provided by Project Innovate and the success of the regulatory sandbox, which has resulted in products now on the market offering new ways to pay, insure and access advice.
To continue to support innovation, the Chancellor announced that the FCA will be taking forward the Kalifa Review’s recommendation of a Scalebox. This draws on lessons from Project Innovate, which has shown that once authorised, firms continue to need higher levels of regulatory support and, often, enhanced oversight. The regulatory "nursery" will keep the FCA in close contact with firms immediately post-authorisation so that it can provide support and, where necessary, intervene earlier to steer firms in the right direction.
The FCA will shortly begin allowing year-round applications for the sandbox (as opposed to its past approach of allowing applications only by cohort) and will advertise more widely the support it already offers to firms seeking to develop their innovative offering. The FCA will continue to lead on sustainability by appointing Sacha Sadan as its Director of Environmental, Social and Governance.
Mr Rathi calls on the government to take action to provide better financial protection for consumers online. There is no reason why different standards should apply to online platforms as compared to more traditional media, such as newspapers. Previously online platforms were exempt from the financial promotions regime, however, this exemption was removed when the UK left the EU. Search engine and social media firms must take greater responsibility for their role in connecting consumers with investment offers.
The FCA is currently reviewing how its Regulatory Decisions Committee functions. The review is considering whether decisions on authorisation and supervisory interventions could be made in a more streamlined way to better enable quick, decisive action, particularly to prevent entry or allow removal from UK markets of those unable or unwilling to meet the FCA’s standards.