The FCA has published a Call for Input seeking “views about specific rules and policies that are restricting innovation or should be introduced to facilitate innovation in digital and mobile solutions.”
The Call for Input is part of Project Innovate, which was launched by the FCA in 2014 to “identify barriers to innovation and work to resolve these without compromising the standards of consumer protection.”
The FCA recognises that firms are starting to use a wide range of digital solutions, including “distributed ledgers and digital currencies, aggregator services, cloud-based services, big data analytics, biometric banking and cognitive computing”, as well as mobile solutions for banking services. The FCA is seeking to learn about any regulatory barriers, either at UK or EU level, that are preventing development of digital and mobile solutions. It is calling on respondents to answer two specific questions and provide examples, by 7 September 2015:
- “What are the specific rules or policies that cause barriers to innovation in digital and mobile solutions for financial services (products or processes)?”
- “Are there any rules or polices that should be introduced to facilitate innovation in digital and mobile solutions for financial services (products or processes)?”
The Call for Input provides a summary of other work the FCA is or has been involved with in this space, which includes:
- A report published in September 2014 culminating out of an FCA thematic review of mobile banking and payments;
- Due to concerns regarding how the use of cloud-based solutions complies with the FCA Handbook (including SYSC 8 and 13), the FCA has engaged stakeholders to discuss barriers to outsourcing third party technology solutions and is considering next steps.
- The FCA is considering the use, benefits and risks of account aggregation facilities and associated technologies in the UK.
- The FCA is due to publish a discussion paper in summer 2015 addressing concerns that regulatory requirements for customer communications cause long T&Cs, which are inappropriate for digital and mobile platforms.
- The FCA is also working with the Payment Systems Regulator, which is currently setting up a Payments Strategy Forum, which will “deliver strategies for industry collaboration to promote innovation for the benefit of service users.”
It is not just the FCA that is “focusing on innovation in digital and mobile solutions for financial services.” The Call for Input references other recent moves towards digital solutions for financial services and their regulation at UK and EU level:
- HM Treasury’s Digital Transformation Project
- European Commission Digital Single Market Strategy launched in May 2015
- Development of a identity verification mechanism –“digital passport”
- UK Government plans to “consult shortly on applying an anti-money laundering regime to digital currency exchanges.
In one of our previous blogs (“The FCA on regulation as a #FinTech friend“, available here) we said that “…for an organisation that’s working within a tight legal framework, with several crises only just behind it …There aren’t many things the FCA can do [to help innovators. However,] Current evidence suggests it’s probably doing most of the things it can…” And the FCA admits as much in its Call for Input. But it also points out that: “although we do not have direct control over EU law, UK legislation or the PRA Handbook, with sufficient evidence we can seek to inform and influence decision-making in relevant organisations.” Those with an interest in these issues should therefore consider responding, if they can.