International fintech link-ups between the UK and other jurisdictions are already “bearing fruit”, according to the UK’s financial services regulator, the Financial Conduct Authority.
Christopher Woolard, the FCA’s executive director of strategy and competition gave the keynote presentation at the BBA Fintech Banking Conference, held in London, earlier today.
In a statement released earlier today, the regulator said that the aim of the speech was to describe the FCA’s role in promoting innovation, give an update on the FCA’s Regulatory Sandbox and Advice Unit and detail work on RegTech.
And of the success stories it highlighted, the UK’s work with other jurisdictions was one area that stood out. Agreements with Australia, Singapore and The Republic of Korea’s financial regulators have been implemented and both domestic and international firms, including those from Singapore, Denmark, USA and Canada have used the FCA’s Sandbox facility to test and launch fintech innovations, the FCA said.
‘Active international strategy’
“We have an active international strategy,” said Woolard. “Earlier this year we signed agreements with regulators in Australia, Singapore and The Republic of Korea. These are already bearing fruit with the first firms using these to smooth a path to market and we hope there will be more such co-operation to come.
“This broad experience – both international and domestic – has taught us a huge amount and we’re pleased to be able to share our knowledge with peers so they in turn can encourage innovation in their spheres of influence,” he said.
Woolard added that he was impressed with what he called “the sheer demand” for a dialogue between innovators, whether new or established firms, often about quite simple aspects of regulation as well as “the most advanced areas of thinking” like the Sandbox.
“It is almost two years since the FCA launched Project Innovate, and in that time we’ve seen the work to fostering innovation yield real results and receive huge global interest,” said Woolard
“We have an overarching statutory objective as a regulator to make financial services markets work well and three key strategic objectives to help guide us to what that means, based on market integrity, consumer protection and promoting competition,” he said.
Project Innovate aims to provide innovators whether large or small with some support to navigate the regulatory system, to reduce the barriers to innovation whilst maintaining the same standards of regulation and consumer protection. A few days ago, the FCA passed the 300 mark in terms of firms assisted.
The FCA said that its Sandbox facility was a “first for regulators worldwide”. It was to act as a “safe space for firms” to test new ideas without incurring all of the normal regulatory consequences, and it opened for the first round of applications in May 2016.
“Of 69 applications, we have accepted 24 to develop towards testing, which met the Sandbox eligibility criteria,” added Woolard. “The demographic of applicants is diverse, covering a range of geographies, both domestic and international, including Singapore, Denmark, USA and Canada.”
The range of sectors covered was also broad: from the applications accepted, four came from retail banking, four from insurance firms, three covering advice and profiling and three related to IPO. Seven applications came from payment firms – including blockchain firms.
A second round of applications has been set for mid-November.
Update on the Advice Unit
The Advice Unit was born out of the Financial Advice Market Review, or FAMR, the FCA statement added. The Review, conducted jointly by the FCA and the Treasury, explored the “barriers preventing people from accessing financial advice” and set out recommendations for overcoming these challenges.
“Technology was identified as a means of giving consumers more access to affordable advice, so, as part of Project Innovate, we established the Advice Unit as a way of supporting firms developing automated models which seek to deliver lower cost advice,” said Woolard.
Having now assessed the applications, the FCA announced that nine firms were successful out of the 19 applications it reviewed in the initial tranche. And of these nine firms, eight are established financial services, who want to bring automated advice to the market at scale.
The FCA said that it aims to share publicly what it has learnt from the Advice Unit’s interactions with firms, in order to give “greater clarity” to the industry on how to take an automated advice model forward.
“We will begin to publish these resources on the FCA website for all firms developing automated advice models in early 2017,” added Woolard.
The full speech from today’s conference is linked here.