EU Fintech developments
By Jacob Ghanty
In the linked article, Jacob Ghanty discusses some UK and EU regulatory developments affecting the FinTech sector. This article was first published on Thomson Reuters Regulatory Intelligence on 1 April 2016.
EU Oversight on payments
By Jacob Ghanty
The second EU Payment Services Directive is set to change the banking landscape in Europe. In the linked article, Jacob Ghanty describes some of the changes that PSD2 will bring about. This article was first published in inCOMPLIANCE, member publication of the International Compliance Association www.int-comp.org.
FCA Encouragement for Roboadvice
By Jacob Ghanty
The UK’s Financial Conduct Authority published its final report on the Financial Advice Market Review on 14 March, which stated that there is a “clear need for intervention by the regulator and the government” to aid the provision of new and more cost-effective ways of delivering financial advice and guidance. The FAMR sets out recommendations to address concerns relating to the affordability and accessibility of financial advice, which includes recommendations to help firms develop automated “robo-advice” models. In the linked article, first published in E-Finance & Payments Law & Policy, Jacob Ghanty expresses his views on robo-advice developments.
China’s FinTech industry growth due in part to accommodative regulations
By Jim Bulling and Michelle Chasser
China’s biggest FinTech companies now have a similar number of clients as the country’s top banks, according to a report on digital disruption by Citi. China’s fintech industry has been growing rapidly over the past decade and is dominated by the largest payments and peer 2 peer lending markets in the world. According to Citi, 4 elements have led to the industry’s growth:
- high internet and mobile device penetration in the market;
- a large e-commerce system with companies focused on payments;
- relatively unsophisticated incumbent consumer banks; and
- accommodative regulations.
Don’t Look a Gift Card in the Mouth: Beware of Liability Under the Electronic Fund Transfers Act
By
Many of us have had a similar experience. We receive a gift card, put it in a “safe” place with other gift cards, and forget it exists. Inevitably, we uncover the gift card and find ourselves asking questions such as: Does this card still have any value? Has it expired? Can it expire? Will I be charged a fee for use (or non-use)? Should I call the 800 number? The experience invariably ends by putting the card aside and promising to deal with it later. But, what really does happen to the value of those cards?
To read more, click here.
What’s next in UK FinTech?
The emergence of blockchain technology and the size of the FinTech industry were the major points of discussion at a recently concluded CBI Insights and KPMG webinar on the future of FinTech.
Blockchain is a data structure that creates a digital ledger of transactions. Using cryptography, blockchain allows participants to securely manipulate the ledger without any central authority. Once the information is entered, it is almost impossible to erase – creating an accurate record of the transaction’s history.
The technology is still in its infancy and currently undergoing significant experimentation. For established financial institutions such as banks, blockchain is seen as a possible solution to the problem of an increasingly complex regulatory landscape. The technology is also seen as an effective tool in combatting money laundering as it tracks a transaction’s entire digital history.
Venture capital investment in blockchain, which had seen a rapid rise over the last several years, is showing signs of plateauing as the technology matures. However, the boom in FinTech investment is expected to continue unabated as companies emerge from their infancy and the adoption of their technology becomes more widespread. In 2015, investments into FinTech were US$14 billion, with major banks such as J.P. Morgan and Goldman Sachs as primary investors. In the UK, Funding Circle, Atom Bank and World Remit each received in excess of US$100 million in funding in 2015. There are now 19 FinTech companies with a market capitalisation in excess of US$1 billion.
The Federal Reserve Takes Steps Towards Developing Faster Payments and Settlement
By Sean Mahoney
The Federal Reserve announced that it engaged McKinsey & Company to help evaluate faster payments solution proposals being solicited by the Federal Reserve from members of its Faster Payments Task Force. The Task Force consists of representatives of participants in the financial services system, including banks and technology firms. This step can be viewed as part of a process of making improvements to the US payments system. It is worth monitoring as any such improvements will likely lead to commercial opportunities.
See the press release here.
The French take on the blockchain
On March 24, the French National Assembly hosted a day-long conference on “Blockchain: Disruption and Opportunities.”
This event aimed at raising awareness of the French elected representatives and corporate executives on blockchain issues and potential uses for the digital transformation of society as a whole.
The closing statement provided by Emmanuel Macron, the French Minister of Economy, Industry and Digital Economy, was subsequently echoed by his announcement on March 29 of the upcoming adaptation of the French finance regulatory framework in order to progressively allow the introduction of the technology.
PREPAID ACCESS GARNERS REGULATORY ATTENTION
By Sean Mahoney
Bank regulators are paying more attention to the role of banks in the prepaid card industry as evidenced by their new guidance on the applicability of know your customer requirements and proposed regulations on record-keeping with respect to master deposit accounts for prepaid cards and other products utilizing “pass-through” deposit insurance.
To learn more about the Interagency Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Cards, which provides a framework to determine whether or not a bank must apply its customer information program to holders of prepaid products for which the bank is the issuer, please visit our Consumer Financial Services Watch Blog at Prepaid Access Garners Regulatory Attention.
Australian Government gets more FinTech friendly
By Jim Bulling and Michelle Chasser
The Australian Government has released its responses to the industry’s priorities for fintech development which it has called “Backing Australian FinTech”. As well as affirming existing commitments, such as introducing a crowd sourced equity funding (CSEF) framework and an incubator support programme, the paper includes a number of initiatives that the Government proposes to undertake. New developments include:
- introduction of an entrepreneur visa in November 2016 for foreign entrepreneurs with innovative ideas and financial backing from a third party;
- possibly increasing the asset and turnover eligibility threshold for CSEF to A$25 million and reducing cooling off periods for investors to 48 hours;
- consultation on a potential framework for crowd sourced debt funding;
- increasing the maximum fund size of Early Stage Venture Capital Limited Partnerships (ESVCLPs) to A$200 million and providing a 10% tax offset on capital invested;
- introduction of a mechanism to allow Innovation Australia to issue binding advice in relation to the definition of ineligible activities for ESVCLPs;
- Productivity Commission inquiry into options for improving access to comprehensive credit reporting (CCR) data;
- a regulatory guide for robo-advice providers;
- possibly allowing licensed insurance brokers to sell insurance policies from unauthorised foreign insurers where they offer consumers a better price and appropriate consumer protection;
- possibly applying anti-money laundering laws to digital currencies;
- a commitment to address the ‘double taxation’ of using digital currency to purchase goods already subject to the Goods and Services Tax (GST);
- establishment of a new Cyber Security Growth Centre; and
- a ‘regulatory sandbox’ in Australia to allow FinTech start-ups to test their products and business models.
Backing Australian FinTech indicates that 2016 will be a busy year for fintech regulation in Australia.
Read Backing Australian FinTech here.