The European Commission is set to allow peer-to-peer lenders and crowdfunders to apply for a pan-EU licence. The announcement comes as part of a broader Fintech Action Plan, which is designed to help harness the opportunities made available by fintech.
The proposed pan-European label will allow a platform licenced in one country to operate across the EU. The Commission has acknowledged that it is currently difficult for European platforms to expand into neighbouring countries, and pointed to this as a key reason that the European market is “underdeveloped” and “fragmented” compared to other major world economies.
The proposed label will be based on a single set of rules. Investors will be protected by clear guidance on standards of disclosure, rules on governance and risk management, and a coherent approach to supervision.
“To compete globally, Europe's innovative companies need access to capital, space to experiment and scale to grow,” said Valdis Dombrovskis, Vice-President at the European Commission. “This is the premise for our FinTech Action Plan. An EU crowdfunding licence would help crowdfunding platforms scale up in Europe. It will help them match investors and companies from all over the EU, giving more opportunities for firms and entrepreneurs to pitch their ideas to a wider base of funders.”
Speaking to AltFi, European P2P bosses offered cautious support for the proposed pan-EU licence back in January. But Patrick de Nonneville, COO at French marketplace lender Lendix, warned of the risk that what emerges is the “lowest common denominator of what each country thinks appropriate”. He suggested that an “opt-in” passport would be the best way forward.
The European Commission's Action Plan features 23 steps designed to enable innovative finance firms to scale up, support the uptake of new technologies, and increase cybersecurity and the integrity of the financial system.
Among its objectives is the establishment of an EU Fintech Laboratory, hosted by the Commission, at which European and national authorities will engage with tech firms in a “neutral, non-commercial space”. The Commission has already set up the EU Blockchain Observatory and Forum, which is focused on identifying the challenges and opportunities presented by cryptocurrencies and blockchain technology.
More broadly, the Fintech Action Plan is part of the Commission's ongoing efforts to build a Capital Markets Union and a Digital Single Market.
The European Banking Federation (EBF) – which encompasses national banking associations from 32 countries in Europe, representing some 3,500 banks – has weighed in on the proposals.
“To fully unlock the potential of fintech we need a European ecosystem that lets financial services providers, old and new, be competitive, also on a global scale,” said Wim Mijs, chief executive officer of the EBF. “This requires truly effective cooperation between national authorities. The Commission needs to serve as a catalyst so that we can ignite this cross-border fintech ecosystem with a flourishing digital single market. Only a real single market that is solidly underpinned by innovative, secure and reliable financial services can secure the jobs and growth we want.”