By Jacob Ghanty
The UK Government announced in last year’s budget its commitment to the early adoption of new technologies to support FinTech companies to meet the greater reporting requirements and higher regulatory standards imposed by the UK regulators, notably the Financial Conduct Authority (“FCA”). The name given to these technologies is “RegTech”. RegTech is part of a wider project launched by the Government to enable the UK to capitalise on the development of new financial business models and disruptive innovation and become the world’s leading FinTech hub. In November 2015, the FCA published a call for input on how it should progress its RegTech work.
The FCA’s RegTech focus sits alongside its efforts to increase innovation in financial services more broadly under its “Project Innovate” initiative and its development of a “Regulatory Sandbox” for businesses to test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of pilot activities. In its call for input on RegTech, the FCA identified some early emerging themes that it considers worth exploring further with the FinTech community. Of particular interest is the proposal that real-time and ‘system embedded’ compliance and risk evaluation tools be developed for financial institutions. Other areas highlighted by the FCA as relevant to this space are: technology accelerators, big data techniques, visualisation and robo tools, software integration tools and cloud technologies.
Firms in the UK FinTech space are advised to follow RegTech developments as they are likely to have a significant impact on the interaction between businesses and regulators.