By Daniel Lanyon on Wednesday 21 April 2021
The UK’s financial regulator has a raft of plans aimed at helping the UK retain its fintech crown including more oversight of fast-growing trends and companies.
The Financial Conduct Authority will launch a regulatory ‘nursery’ for new fintechs by the autumn, in a move that will provide enhanced oversight to newly authorised fintech firms.
Nikhil Rathi (pictured), the UK financial regulator’s chief executive officer, says a period of enhanced oversight of newly authorised firms will help these firms develop and grow by using their regulatory status while keeping a closer eye on consumer protections.
“Currently, firms gain regulatory status and are treated in the same way as a firm with a long track record. The regulatory nursery will keep us in close contact with firms immediately post-authorisation so we can provide support and, where we need to, intervene earlier to steer firms in the right direction,” Rathi said in a speech yesterday marketing UK Fintech Week.
Rathi added that the regulator “must constantly seek to level the playing field”, somewhat echoing the UK government’s “levelling up” agenda, in order to help new entrants test innovative ideas and gain regulatory approval.
“This can do so much for consumers looking for easier, more intuitive access to services and new ways of transacting and investing, as well as supporting the future of the UK economy,” Rathi said.
“But to achieve truly fair, competitive markets in service of consumers we must be rigorous. Trust in our financial services can only be built by also levelling the playing field so those firms who play by the rules, who genuinely work in their customers’ interests, are not disadvantaged by those who can’t or won’t,” he added.
Seven in ten of us now, he says, are now use the services of at least one fintech company. This figure is higher in the UK than in equivalent markets, for example, owing to people adopting financial aggregator services.
”The challenge for us is the balancing act required by the rider within our competition objective – in the interests of consumers,” he said.
"The choice created by competitive markets is, in itself, not a social or economic good. It only becomes one when it delivers better or cheaper products, an improved or more tailored service, and pushes incumbents to fight harder to attract and keep their customers,” he added.
Rishi Sunak, the UK’s Chancellor of the Exchequer, also speaking this week, announced the FCA will be taking forward the Kalifa Review’s recommendation for a ‘Scalebox’.
Rathi says that for this to work and authorised firms continue to need higher levels of support from the regulator and, often, enhanced oversight. Hence the need for the ‘regulatory nursey’.