FCA to review regulatory barriers to innovation

Firms urged the FCA to re-evaluate its ‘technology neutral’ stance to regulation and create a more ‘digitally conducive’ regulatory environment.

The respondents to an FCA Call for Input said that while many innovative digital and mobile solutions already exist, "regulatory requirements can inhibit firms from using a more innovative approach in how they communicate information to consumers".

Stakeholders argued that interpreting existing rules is a challenge, and asked for more specific guidelines on the use of new technologies.

Stakeholders, regardless of their marketplace, argued that many consumers prefer to engage with services through digital and mobile platforms and therefore expect the industry to be able to offer products through these mediums.

Additionally, some firms believe the treatment of liability (specifically how the Financial Ombudsman Service makes decisions on consumer redress) coupled with the absence of a liability longstop for advisers, is another barrier to innovation.

Responding, the FCA admitted that "there are a number of aspects within the financial advice market that are perceived as barriers to innovation".

In a feedback statement, the FCA added:

"As part of our commitment to help firms meet their regulatory requirements more efficiently and effectively we are also exploring what innovative solutions
exist through the greater use of technology.

"We are working jointly with HM Treasury on this review and will be presenting a set of proposals to the government in spring 2016. Given the significance of
this work and its relevance to the issues raised by respondents to our Call for Input, we will explore these issues through the FAMR."

David Finlay, Distribution Director at Northview Group, commented:

“The FCA’s feedback statement on regulatory barriers to technological innovation is to be welcomed. The UK is the global leader in financial technology, and the FCA has a crucial role to play when it comes to supporting the continued development of FinTech across financial services.

“In the world of mortgages, technology will play an ever more important role in the years to come. Whether shaping the design of products, propositions and communications, or improving the working lives of brokers into the future, there are huge opportunities for those in the industry that embrace the digital age and harness the benefits of FinTech to launch genuine innovations. We look forward to the FCA increasingly supporting the sector as Project Innovate continues.”