There is an old compliance joke. Yes, there are actually some jokes in compliance. No, they aren’t all funny! Some of them are the regulations themselves.
In any case, there is a compliance joke which dips its toes into also poking fun at our dear departed friends, the EU. Although it has since been found to be untrue, it is still poignant:
Lord’s Prayer – 66 words, 10 Commandments – 179 words, Gettysburg address – 286 words, EU regulations on the sale of cabbage – 26,911 words.
With the UK going through the act of ‘consciously uncoupling’ with the EU, doors have inevitably been closed, while other doors have been opened.
In 1986, Ms Thatcher, and her government led a charge on the city of London in response to an antitrust case in respect of restrictive and unfair practices. The government enforced measures, including the abolition of fixed commission charges, and a requirement for electronic screen based trading, which lead to the ‘deregulation’ of the city in an event now known as the ‘Big Bang’. This new flexibility opened up competition and shook up the sector, leading to London becoming the Financial behemoth it is today.
There is a path open to the powers that be in the vein of Maggie T. With the EU dragging its heels on declaring equivalence with UK regulations (strange – they were considered equivalent prior to Jan 1st, and the FCA rules have not changed substantially since then). Firms are fast losing European clients, who they will have a hard job winning back once they are in a position to service them in a compliant manner. After all, these are clients who want access to services. If one firm cannot provide for them, they simply go to another that can.
The government and the regulator can look to review certain regulations in terms of their applicability and practicability in the UK. This process looks like it may have already begun, particularly with the FinTech sector in mind. The FCA published Consultation Paper CP21/3 on changes to the regulatory technical standards (RTS) on strong customer authentication (SCA) and common and secure methods of communication. In this consultation paper, the FCA has identified and highlighted “barriers to the future success and adoption of open banking as it grows in the UK”. The proposals therefore are to lighten the loads on open banking firms – with respect to these barriers.
For years, there has been ‘regulatory creep’, perhaps now it is the dawn of ‘regulatory un-creep’?
Is this the future direction we are heading in? Possibly.
Are the powers that be set to flex their muscles and show off their new found independence? Probably.
Will the FinTech Sector thrive as a result of this type of approach? Hopefully.
The UK is on the cusp of an opportunity to become the genuine global FinTech hub. This needs to be seized as part of the Post – Brexit planning and made a priority (although I would say that wouldn’t I…). There is already considerable depth in the UK FinTech sector, the business models of which are generally scalable in their nature. The British population themselves generally have a higher engagement rate with new and ‘funky’ FinTech services, more so than for example in Spain – where traditionally delivered services are still generally the norm. The UK therefore, is already fertile ground for FinTech firms. In principle, and with the right guidance, it should only get better.
The future of the UK’s FinTech industry is in BoJo, and his government’s hands!
Gilbert founded FinTech Compliance in early 2016 as the UK’s first specialist FinTech compliance consultancy. He holds the CISI’s Level 6 Diploma in Investment Compliance – including a certificate in combating financial crime – and the Investment Management Certificate from CFA (IMC). He has experience working with firms across the financial services spectrum, including payments, crowdfunding, investment banking and insuretech. Gilbert started in financial services in an operational role within a boutique investment manager, and then spent four years rising through the ranks as a compliance consultant in a leading City consultancy firm. He is also a mentor at Level39 – Europe’s largest FinTech accelerator.
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