With the economy under such strain, should new fintech regulation be paused?
Elisabeth Kohlbach, co-founder and chief executive at Skwire, says YES.
The UK’s fintech scene is one of the most vibrant and well-regulated in Europe. And in extraordinary times, this UK success story needs to be nurtured, not subject to more red tape.
The country is trying to recover from the worst economic contraction in 300 years, so it makes sense to judge every policy against how it will support the recovery. With certainty one of the most important factors in creating business confidence, it would therefore send a powerful signal if there was to be a moratorium on any new regulation until the end of the year.
This would be in keeping with the policy response to the crisis so far. For example, in real estate we have seen banks provide mortgage holidays. This helped provide greater certainty, and so regulators should apply the same logic. A pause on any new fintech regulation is a sensible measure to help support the recovery.
Andrew Boyle, co-founder and chief executive of LGB&Co., says NO.
Fintechs have contributed much to the innovation and advances in UK financial services as they have prompted traditional firms to improve their responsiveness and efficiency for the benefit of both corporate and retail customers. A light-touch approach has helped to foster such creativity — the Financial Conduct Authority’s Project Innovate and regulatory “sandbox”, and the Bank of England’s fintech accelerator have all been lauded as excellent examples of a progressive regulatory stance.
However, as fintechs start to take a more central role in financial services, particularly when offering consumers a host of retail products, they will have to become subject to the same level of regulatory oversight as other pillars of the financial system. This means having adequate capital and mitigating the risk that their innovative services will lead to a new round of mis-selling, mis-advice, and more complex fraud.
Financial services firms are vital for businesses to raise the capital they need to survive the pandemic and drive growth. Any fintech-inspired scandal would only compromise City firms’ ability to do this and delay the UK’s recovery.
Ensuring that fintechs are regulated in proportion to the increasing influence they have in the economy is entirely appropriate.
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