Innovate Finance has submitted a response to HM Treasury’s Call for Proposals on measuring success in relation to the financial regulators’ new secondary objectives, highlighting the importance of supporting innovation in FinTechs to maintain competitiveness.
The secondary objectives introduced by the Financial Services and Markets Act (FSMA) include essential requirements for evaluating the performance of the FCA and PRA regarding the competitiveness of UK fintech. FSMA grants the Treasury the authority to set performance metrics for this assessment. Innovate Finance has proposed a set of metrics and actions aligned with these goals.
In light of the Consumer Duty, Innovate Finance suggests a review of all current consumer regulations to identify any redundancies or contradictions with the new Consumer Duty, advocating for the repeal of outdated ‘tick-box’ regulations.
As part of its recommendations, Innovate Finance has called for:
- A new ‘RegTech test’ when the FCA or PRA introduces new regulations, designed to evaluate how technology can facilitate regulatory compliance.
- A departure from a ‘one size fits all’ regulatory approach that requires smaller firms to adhere to the same standards as larger ones.
- Enhanced resources and expertise within the regulators to support innovation, including dedicated account managers for FinTechs post-sandbox and growth programme graduates, providing them with the same supervisory support that large institutions receive; increased collaboration between the industry and regulators through secondments, joint training programmes, and external hires; and expedited authorizations to minimize delays in hiring key personnel and securing regulatory market approvals for FinTechs.
In a press release, Janine Hirt, CEO of Innovate Finance, remarked: “Over the last decade, the UK has been the leading hub for FinTech globally, supported by regulators who have embraced innovation. However, as other countries catch up, we risk falling behind unless our regulators continue to innovate. The UK is one of the best places in the world to start and scale a FinTech, attracting talent, capital, and international business into the UK economy. This is contingent on a dynamic and proportionate regulatory environment that positions the UK as the global epicenter for FinTech.
“As technology, and the FinTechs that enable it, become central to financial services, we need to see new regulatory approaches that foster innovation. We also welcome policies that create more agile regulators capable of protecting both consumers and market competitiveness while facilitating innovation in financial services,” Hirt stated.