Archive: April 29, 2016

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UK Government opens consultation on draft innovation plan for financial services
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New “PropTech” business models in the UK commercial real estate market

UK Government opens consultation on draft innovation plan for financial services

By Jonathan Lawrence

According to the UK Treasury’s recently released draft innovation plan for financial services, the Financial Conduct Authority (“FCA”) “intends to broaden engagement with large incumbent institutions”. “To facilitate increased dialogue the FCA plans to proactively engage with large incumbents to ensure their potential for consumer-friendly innovation is not being held back by regulatory considerations,” the Treasury said. “In particular, it will seek out opportunities to pilot research on new initiatives.”  The regulator is recognising that innovation does not just happen within the start-up environment and that it is within its power to support a broader appetite among the traditional players in the market to use the latest technology to innovate, whether on their own or in collaboration with others.

In March 2016 the FCA and Australia’s Securities and Investments Commission (“ASIC”) signed a deal to make it easier for financial technology firms based in each country to win authorisations to operate in the other country. The Treasury said the FCA can help “put UK-based innovators in touch with the right regulators when they look to start doing business in other regulatory jurisdictions” and is “ready to help non-UK innovators interested in entering the UK market”. The FCA wants to put more “co-operation agreements” in place “with key regulators”, the Treasury said.

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New “PropTech” business models in the UK commercial real estate market

By Matthew Gibbon and Lucy Haworth

A round table discussion held by the Centre for the Study of Financial Innovation in London on 26 April 2016 featured presentations from new online marketplace platforms offering opportunities in the UK commercial real estate (“CRE”) sector:

  • Landbay, a peer-to-peer lending service for portfolio landlords of residential buy-to-let mortgages;
  • LendInvest, a provider of CRE bridging loans, funded by a combination of institutional investors and an online marketplace platform; and
  • Proplend, a peer-to-peer lending platform offering a CRE syndicated loan model for retail investors.

The consensus of the panel was that these platforms were providing a means by which retail investors could directly invest in an asset class previously unavailable to them, leading to increased access to indirect ownership and investment in the UK property market – accessing real estate by means of financial instruments. In addition, technology is increasingly being used to streamline pricing and the administrative process; investors lending through Proplend, for example, sign up to standardised terms and conditions designed to reduce the administrative burden and speed up the lending process.

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