By Daniel Lanyon on Friday 18 May 2018
Andrew Bailey, chief executive at the FCA, expressed his support for disruptive finance in a recent speech.
The chief of the UK’s financial services regulator the Financial Conduct Authority (FCA) has thrown his support behind the UK fintech industry as well as welcoming a Brexit transition period – of undefined length – to avoid cliff edge risks for financial services firms.
Andrew Bailey, chief executive officer at the FCA, believes disruptive finance will continue to grow and highlighted the regulator’s efforts to further globalise the UK’s lead in fintech.
“Fintech and ‘big data’ are transforming financial services. We will seek to maintain a regulatory environment where consumers and firms can maximise the opportunities of competition, innovation and Big Data while ensuring consumers don’t suffer harm as a consequence of those innovations,” he said.
“Particularly exciting over the coming months will be our work with fellow regulators on a blueprint of the global sandbox – in which innovative firms can test in multiple jurisdiction, minimising time to market,” he added.
Bailey also gave his thoughts on the ongoing concerns and uncertainties off Brexit. He says that the FCA are working on the basis that the UK’s exit from the EU will take place in March next year.
“After this, we expect a transition or implementation period to take effect, which we strongly welcome. We think that having such a period is in the interest of all parties in this process, for two reasons.”
First, he says the UK’s financial industry needs a period of time “in which there is clarity and stability about the relationship between the UK and the EU”
This is so, he says, potential remedies for the risks that could arise from a rapid change in the UK/EU relationship can be put in place to mitigate “cliff-edge risks”.
Secondly, Bailey adds that it is better to have a period of preparation for the future relationship of the UK and EU in the knowledge of exactly what that it will be.
“I would like to think that is a consensual statement,” he said.
The “cliff-edge risks” Bailey says centre on the ‘passporting’ of financial services between countries.
“These arise in large part if there is a sudden and disorderly falling away of the passporting system without having an effective plan to bridge to the future. The pass porting system goes both ways, from the UK to the EU, and from the EU to the UK, so both sides have a strong interest in orderly transition. This is not about one side asking for a favour or picking a cherry,” he said.
“The risks of not getting this right are considerable, because without passporting the authorisations of those firms that rely on it fall away in the market into which they passport, unless some other action is taken,” he added.
Bailey delivered the speech at the BIBA 2018 Annual Conference in Manchester on Wednesday 16 May. You can see the full transcript here