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.
In its consultation paper the Treasury has asked stakeholders to outline their views on whether UK regulation provides effective support for innovation in financial services and whether regulators “understand innovation … and potential areas where new technologies and disruptive business models might emerge in the sector”. Firms are also invited to highlight any “gaps in approach or areas” that they believe UK regulators could do more to support “innovative technology and disruptive business models” and if regulators themselves could “better utilise new technologies to deliver their own work more effectively”.
The draft innovation plan for financial services can be found here.