Regulator as Incubator in U.K. (June 2, 2014)
Payments startups looking to get off the ground in the U.K. soon could gain support from a somewhat unexpected source: regulators. The country’s Financial Conduct Authority (FCA) has announced a new program, called Project Innovate, which aims to encourage innovation in the financial services market and create room for new entrants into the market, particularly those developing models that aren’t explicitly addressed by current regulation.
Outlining the program last week during a London conference hosted by Bloomberg, FCA Chief Executive Martin Wheatley cited the rise of mobile banking technology, P2P, big data and digital currencies, which have transformed personal finance. “Clearly it’s important for regulators to be ready for this world, including the tech-led developments that are likely to change the face of finance in the years ahead,” he said. The U.K.—and London, in particular—has been at the forefront of these advances, Wheatley noted, citing London-based startups, including Montise, WorldRemit and Nutmeg.
A key objective of Project Innovate is to make sure developments that “genuinely promise to improve the lives of consumers or clients” are supported by the regulatory environment. The FCA already has begun informal policy talks with several startups and soon will develop a scoping document that explores how innovation can best be supported, Wheatley said. In the meantime the agency will establish a policy hub to provide compliance assistance to firms developing new models or products—and look for areas “where the system itself needs to adapt to new technology or broader change.”
The FCA is in the midst of developing new payments industry regulations and establishing a new subsidiary regulatory body for payments systems in the U.K., as required by the Financial Services Act of 2013.
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