Project Innovate, a Financial Conduct Authority (FCA) scheme designed to help fintech firms get regulation fit, is to go global this year, the organisation’s strategy chief Christopher Woolard has announced.
Speaking at a special FCA event to mark the 22 February start of UK Fintech Week, Woolard revealed that his organisation has been approached by more than 25 non-UK financial innovators in the past year, either for support or to learn more about UK regulations.
“If we want disruptive innovators at scale,” he said, “we need to think about how they can expand internationally with the minimum of friction. This year, through Project Innovate, we aim to ramp up our international engagement.
“We are looking to have cooperation agreements in place with some key regulators to reduce some of the barriers to UK-authorised firms looking to grow scale overseas, and to assist non-UK innovators interested in entering the UK market.”
Reflecting on the core purpose of the initiative – launched in October 2014 – Woolard stressed that it “isn’t free consultancy or picking winners”. Instead, he said, it helps innovative firms work cooperatively with the FCA.
“Some tech start-ups,” he explained, “are completely unfamiliar with financial regulation, which can be daunting. Larger firms are more familiar with regulation, but often have complex questions about their new propositions. We are here to help both types of queries – as long as propositions meet our criteria that they are innovative and we can see benefits to consumers.”
In Woolard’s view, broadening Project Innovate’s geographical scope is all part of fintech’s progressive globalisation, which has led regulatory agencies overseas to take similar steps – for example:
In March, Woolard said, he will visit executives at the Australian Securities and Investments Commission to exchange views and ideas, one year on from its move to launch an Innovation Hub that works in a similar way to the FCA’s scheme.
Woolard also revealed that the FCA will roll out another, major initiative this year, in the form of an innovation ‘Sandbox’. The scheme will enable new fintech outfits and novel offerings from traditional institutions to trial their concepts and services in a safe, live environment, without the threat of regulatory action.
“We will offer a range of options for firms,” Woolard said, “such as authorisation for testing, no enforcement-action letters, and individual guidance and waivers for all firms. Safeguards for consumers and the financial system while testing will be agreed between the businesses and the FCA. One thing that we won’t compromise is lower standards of protection for consumers.”
Stakeholders such as the British Bankers’ Association, the Association of British Insurers and fintech advocacy group Innovate Finance have provided responses to the FCA’s initial Sandbox proposals, which were unveiled in December. Woolard said: “We are currently reviewing the feedback received, and plan to have the Sandbox up and running later this spring.”